Budget to Inflict Hardship on Citizens and Economy, says CAW President

June 6, 2011, 9:45 PM EST

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The budget tabled today by the Conservative majority government will result in "unnecessary hardship for Canadians, and unnecessary risks for our economy," according to CAW National President Ken Lewenza.
"The deep spending cuts planned in this budget will destroy tens of thousands of jobs, and will noticeably reduce the quality of public services expected by Canadians," Lewenza said, reacting to the budget's announcement of $11 billion in spending reductions over four years under the so-called "strategic review."
"With the economic recovery already very much in doubt, and with private sector growth and investment sluggish, the last thing Canada needs is billions less in spending in our public sector," said Lewenza.  He argued the spending cuts will further undermine consumer spending and overall purchasing power in the economy.
Lewenza pointed out that last year's deficit significantly undershot the official targets, by $13 billion for 2010-11 (the fiscal year just completed).  Next year's deficit target is also clearly designed to be outperformed, expecting only a $4 billion decline in the shortfall - when in fact the combination of economic growth and the winding down of the stimulus package will have a much larger impact in reducing the deficit.  "This continues a tried-and-true pattern of Finance Ministers who over-exaggerate the scale of deficits, in order to achieve their ideological goal of smaller, weaker government."
Under the budget, federal program spending will decrease by three percentage points of GDP from 2009-10 to 2015-16.  That represents a decline in real per capita program spending of almost 15 percent. 

"To claim that spending cuts of this magnitude can be achieved only through efficiencies and attrition is utterly unbelievable," Lewenza said.  "They will result in a tangible deterioration in public services, infrastructure, and even safety."
Canada's federal deficit and debt are much smaller than most other industrialized countries, and are the lowest in the G7.  Last year's deficit came in at just two per cent of GDP, and the debt-to-GDP ratio - which is the most important indicator of fiscal stability - has already begun to fall after the recession.
"No reasonable argument can be made that Canada faces a deficit or debt crisis," Lewenza added, "so why is the government prepared to sacrifice so much in pursuit of a budgetary goal that is clearly ideological?"
Lewenza called on the government to reverse the planned cutbacks, and instead reinvest the funds in public infrastructure, services, and pensions.  "If we're going to have a strategic review, it should be to identify areas where government is failing to meet the needs of Canadians, and then quickly correct those failings - in areas like early childhood education, poverty among seniors, and Canada's longer-run infrastructure deficit."
Lewenza criticized the government for pressing ahead with $3 billion per year in additional corporate income tax cuts (the rate, which equalled 29.1 per cent in 2000, will fall to just 15 per cent next year).  "To eliminate good jobs and cancel entire public programs, while handing out still more to corporations who just sit on the cash, reveals terrible judgment, both economically and morally."
Lewenza also highlighted the problem faced by unemployed Canadians whose EI benefits have run out, even though unemployment remains very high (over 2 million, according to broad measures).  He called on the government to reinstate its recently-expired extension of EI benefits.

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