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Alternatives to Austerity

By Nadia Alexan, founder of Citizens in Action


For the past thirty years, our governments, in collusion with the business sector, have been trying to sell us a bill of goods about how their coffers are empty, how they must cut down the size of the state and how they cannot afford the cost of our public services anymore. Therefore, they are obliged to cut their expenditures in order to balance the budget and to eliminate the deficit. In other words, their hands are tied.

However, what they are not telling us is that we have alternatives to their measures of austerity, which have been discredited by the major economists around the world, notably by Joseph Stiglitz, economist and Nobel Prize winner, who warns against such cuts, which do nothing but aggravate the economic situation and lead to recession.

It’s hard to believe that after the Second World War, companies and banks were paying the bulk of the taxes at 56%. Throughout the years, successive governments have cut down the tax rate until now, companies, financial institutions and banks are only paying 15% at the federal level and 12% at the provincial level. However, because they have umpteen tax loopholes, tax credits and tax havens, they end up paying a pittance of  4%,that is if they pay at all. Consult the book by Brigitte Alepin, economist & Harvard graduate:«Ces riches qui ne paient pas d’impôts»

Consequently, the role of taxes in the distribution of wealth has failed miserably. Salaries have been stagnating and inequalities have been rising for the past 30 years, while profits for the one per cent have been soaring. Twenty years ago, salaries of the top brackets were only 10% higher than the average salary. Today, this gap is ten times higher.

Even the experts of the IMF and the OECD were obliged to admit that austerity measures don’t work; worse still, they contribute to increase inequalities and a loss of jobs. On the contrary, pundits urge governments to stimulate the economy by increasing expenditures on social programmes and by increasing the taxes on the highest 10% of profit earners.

Here are some alternatives to cuts in social programmes: Don’t believe governments when they tell you: We have no other alternatives to austerity:

  1. Before 1988, there were 16 levels of progressive tax brackets for individuals. Today, these brackets were reduced to 4. By increasing the tax brackets to 12, we can increase our revenues by 10 billion dollars.

  2. We are the only country among the OECD with a public health care system but with no public system for medication. Here, in Québec, we pay 30 % more for our drugs. In negotiating better prices with pharmaceutical companies, as Australia, New Zealand and other countries have done, we can save another billion dollars.

  3. Quebec is the most generous province in its fiscal favours to companies and banks. We dole out a whopping 960 million dollars in subsidies to the multinationals and the rich, who are already making record profits. In Ontario subsidies to companies cost every citizen $165.00 yearly, whereas in Québec, the cost per citizen is $776.00. We could save 1720 billion dollars by cutting these favours to businesses.

  4. The biggest hoax of the 20th century is that in relieving the tax burden of companies, they will miraculously create jobs. The example of Bombardier, which has benefited from the largesse of subsidies and is now outsourcing its projects to India, disproves this idea. Even Mark Carney, previous governor of the Bank of Canada was scandalized by the 620 billion dollars, on which companies are sitting, without investing a cent to stimulate the economy or to improve their infrastructure. Why would any company go through the trouble of creating goods, when they can make more money speculating on the casino we call, the stock market?!!

  5. It is a well-known fact that the majority of banks and financial institutions do not pay a cent in taxes. We could be saving billions of dollars, if we were to re-establish the tax on Capital gains and reduce the tax loopholes for the richest one per cent.

  6. Public Private Partnerships (PPP) lead to collusion and corruption as evidenced by the Charboneau Commission and the sad example of the CHUM hospitals. Business people think that the public purse is a well without a bottom, from which they can withdraw money to their hearts’ content. Quebec tax payers dish out 30% more for their infrastructure than any other province. We can save at least 11.3 billion dollars, if we were to undertake our own projects, as we used to before partnerships became fashionable.

  7. According to OECD calculations, Quebec is losing the exorbitant amount of 8 billion dollars, every year, in tax evasion, an amount that exceeds our supposed collective debt. We could save billions by recuperating these amounts hidden in tax havens.

Tell M. Martin Coiteux, minister in charge of administration and of cutting social, programmes, that we have the means to do better. Tell him that it is his neoliberal ideology that is preventing him from implementing alternatives to austerity. Tell him that cutting necessary services to the poor, the vulnerable and the needy, is not courageous but rather cowardly. Tell this government that with a vote of 40% in the last elections, they have no right to pillage our public services.

Sources of solutions: Coalition oppose à la tarification et à la privatisation des services publics.







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Home > Vultures are circling Canada's health care. Are we prepared to pay the price?

Columnists [1]



Vultures are circling Canada's health care. Are we prepared to pay the price?


Murray Dobbin [2]

| June 12, 2015

There's been lots of attention paid recently to the Canada Pension Plan and how to extend it, alongside news stories and commentary about how adequate or otherwise Canadians' retirement situation will be. The sunshine boys over at the C.D. Howe Institute (a.k.a. the Isn't Capitalism Wonderful Institute -- ICWI) reassure us that everything is just fine and we should just shut up and ignore all the warnings. The author of an ICWI study [8], one Malcolm Hamilton, observes: "Canadians frequently read that they borrow too much, spend too much, save too little, retire too early and live too long."

Well, yes, Malcolm, they are told that because it is regrettably true. Personal debt levels are at a record high of 163 per cent of after-tax yearly income, savings rates are a small fraction of what they were in the 1970s and '80s, and low interest rates (trying to goose a system that has now adjusted to goosing) has given them license to borrow madly off in all directions. According to a 2014 BMO Rainy Day report [9]:

"Three in ten Canadians are living paycheque to paycheque or spending more than they earn… Forty-seven per cent of Canadians said they have enough to cover three months or less. …One in five -- 19 per cent -- have less than $1,000."

The 2014 survey of employees [10] by the Canadian Payroll Association (CPA) found:

"more people are overwhelmed by their debt, are saving less and would face real hardship if their paycheque was delayed by a single week. … Just over half, or 51 per cent, of the 3,211 employees surveyed by the CPA said it would be tough to make ends meet if their paycheque was delayed by one week."

Between 1980 and 2005, the actual dollar (after inflation) increase in annual income in Canada was $52 -- that's right, just $2 a year. But I guess you could save that.

The elephant in the room

Enough about the brutal facts that everyone except the folks at the ICWI know about. Whatever is done with the CPP, however much wages may or may not increase and how we deal with the 17 per cent of mortgage holders who will be under water if interest rates go up 2 per cent, there is another elephant in the room. It's called medicare -- or, if you've been paying attention, the threat to medicare.

When actuaries and economists work out their retirement numbers they do so with a bunch of working assumptions. Except that if the plan for medicare designed by Stephen Harper is actually carried out (and the numerous other threats materialize), there is one very large assumption that will be patently false. Medicare allows everyone (including the 1%) to lop off a big chunk from their retirement needs -- in the U.S., private health insurance costs the average American family $15,000 a year -- and even that covers only a portion of costs.

A U.S. study, [11] "Get Sick, Get Out: The Medical Causes of Home Mortgage Foreclosures," shows just how devastating sickness can be without public health care: "Half of all respondents (49%) indicated that their foreclosure was caused in part by a medical problem…" The study also examined the impact of medical disruptions -- large out-of-pocket health payments, loss of work due to medical issues, and those tapping into home equity to pay medical bills. Sixty-nine per cent of respondents reported at least one of these factors.

Medicare isn't dead yet, you say. But for Canadians looking to retire in 25 to 40 years, given the trends, it well could be. Medicare is under attack on so many fronts it will take incredible determination on the part of those who will need it to ensure it's there when they retire. Yet younger generations -- who face the greatest threat of losing public health care -- don't seem to think about it that much. They should -- and before the fall election.

The number of vultures circling the most lucrative public service plum in the firmaments is truly scary. And it is driven by the fact that there is almost nowhere else to invest the hundreds of billions of idle cash sloshing around in corporate coffers. The obscenely profitable private system in the U.S. is a powerful motivator.

Threats to public health care

The big five vultures anticipating the joys of feeding off medicare's carcass include:

  • B.C. medical privateer Brian Day's legal challenge to medicare;
  • the still unsigned Canada-U.S. "trade" deal (Comprehensive Economic and Trade Agreement);
  • the continuing scam of public-private partnerships fleecing health budgets of hundreds of millions of dollars in excess costs in virtually every province;
  • a new domestic services treaty (Trade In Services Agreement);
  • and lastly, Stephen Harper's new, imposed, health "accord" that will decrease federal contributions to the provinces by $36 billion over 10 years.

Brian Day's legal challenge (based on the Charter of Rights and Freedoms) is perhaps the most frightening of the health-care vultures because if he wins, it will effectively constitutionalize the right of health-care corporations to compete with medicare. Researcher Colleen Fuller's CCPA study [12] "The Legal Assault on Universal Health Care," details how "Day wants the B.C. Supreme Court to legalize extra-billing, user fees and private insurance, creating an American-style health care system here in Canada." In the U.S., in 2004, "health care regulation cost up to $340 billion out of a total health expenditure of $1.7 trillion. In spite of such high expenditures, fraud costs the U.S. health system $75 billion annually."

The flurry of corporate rights agreements being pursued by the Harper government are also a threat to the viability of medicare. The Canada-EU deal, the Comprehensive Economic and Trade Agreement (CETA), will immediately add at least $2 billion to drug costs in this country. The 51-country Trade In Services Agreement (TISA) now being negotiated in secret, threatens to apply the deregulatory imperative of investment agreements explicitly to services -- including health care. As Public Services International (PSI) has pointed out [13], TISA "would restrict governments' ability to regulate, purchase and provide services. This would essentially change the regulation of many public services from serving the public interest to serving the profit interests of private, foreign corporations."

The most dangerous threat of all

But by far the most dangerous threat to medicare is Conservative Prime Minister Stephen Harper. Harper hates medicare more than any other aspect of Canadian governance and democracy. He actually quit politics in the late '90s to become the head of the viciously right-wing National Citizens Coalition -- an organization founded in the early 1970s explicitly to fight medicare.

Until 2014, medicare in Canada received federal funding through a 10-year (legally binding) accord negotiated by the provinces and the federal government, providing provinces with a 6-per-cent increase every year. But what is in place now is a 10-year funding formula imposed by Harper on the provinces with virtually no consultation. Its increase per year is just 3 per cent -- which means a loss of $36 billion over the 10 years. It is classic Harper -- make a structural change whose bite is worse and worse as years go by. The underfunding systematically pushes provinces to cut and privatize.

Harper has abandoned all federal oversight or guardianship. There are no strings attached to the money. And the equalization aspect of the former accord is also gone, meaning increasingly unequal health care across the country and an erosion of the principle of universality. Lastly, the current funding formula not only brings the funding contribution of Ottawa to a record low 19 per cent; it is not legally binding and if Harper wins the election he could unilaterally chop billions from medicare any time he chooses.

Some 40 per cent of Canadians can't be bothered to vote in federal elections, mistaking ill-informed cynicism for sophistication along the lines of "they're all the same." I wonder if they'll remember that refrain 30 years from now when they have to remortgage their house to pay their medical bills.

Murray Dobbin has been a journalist, broadcaster, author and social activist for 40 years. He writes rabble's State of the Nation [14] column, which is also found at The Tyee [15].