toward a peoples budget

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Toward a Peoples Budget

A green paper rom the Ontario Federation o Labour

February 2013

For more inormation, and to become involved, please visit

www.thepeoplesbudget.ca

The Peoples Budget

c/o The Ontario Federation o Labour

15 Gervais Drive, Suite 202, Toronto ON M3C 1Y8

Telephone. 416 441-2731Fax. 416 441-1893 or 416 441-0722

Toll-Free. 1-800-668-9138

TDD. 416-443-6305

Printed with unionized labour: COPE343


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A green paper rom the Ontario Federation o Labour

Ontarians have a proud history o accomplishinggreat things when we work together or thecommon good: developing public schools

that are the envy o the world, building a province-wide network o community colleges, and creatinginstitutions such as TVO and TFO, to name just a ew.

In challenging times we have turned to each other,

sought reuge as members o a community who sharecommon values and a commitment to helping thosewho are struggling. We have done this by relying on

the old adage that we are stronger collectively, thatwe can accomplish more together than any one ous can on our own. This idea is at the very heart ogovernment.

We must call on this sameresolve today, or these areuncertain times in Ontario.

Many amilies are struggling.

Proud men and women whohave been the casualties ocorporate layos or public

sector job cuts have to makedicult choices, such as thechoice between paying or housing or paying or ood.

Recent graduates who once brimmed with optimismhave elt that optimism wane under the weight oexorbitant student debt and ew career prospects.Seniors who dedicated a working lie to once powerul

corporations or dutiully saved through RRSPs havehad their trust and their incomes eroded by the

poor, and sometimes raudulent, decisions o others.Those trapped in a perpetual cycle o poverty are

nding ewer reasons to hope they will be able toimprove their situation.

Toward a Peoples Budget

The next provincial budget presents an opportunity orMembers o Provincial Parliament to demonstrate boldleadership. Unortunately, this necessary leadership

has been missing, lost amid a stagnant economy thatis having a regressive infuence on many Ontariansand a political discourse dominated by voices callingor even harsher austerity measures.

It is time to change the conversation about Ontariosuture. We may begin this change by challengingsome o the more common myths that served as

the oundation or the 2012 Ontario Budget. Ontariocannot aord a budget based on myths.

It is time tochange theconversation

aboutOntariosuture


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The government can no longer aord to deliverthe same level o services to Ontarians

While it is true social spending increased in manyareas under the Liberal government, ollowingthe Conservative government o 1995-2003, the real

story is the obsessive zeal with which the Provincepursued personal and corporate income tax cuts,starving the treasury o badly needed resources. In

act, these tax cuts have let a gaping $15 billion-per-year hole in potential annual revenue that could beput toward improved public services. These choices,combined with less generous transer payments

rom the ederal government, have resulted in once-proud Ontario trailing the country in a number o keymeasurements o a air and just society. Considerthe ollowing:

40 per cent o Ontarians over 600,000 amilies

are struggling with incomes that are stagnant ordeclining, and Ontarios poverty rates are rising

aster than almost every other province. Between 1981 and 2010, Ontario had the second-

highest increase in poverty in the country (Source:Lars Osberg and Andrew Sharpe, Centre or the

Study o Living Standards, Beyond GDP: Measuring

Economic Well-Being in Canada and the Provinces

1981-2010 (September 2011)).

With more than 152,000 Ontario householdson wait lists or assisted housing, Ontario hasthe worst record o all provinces in aordable

housing investments. In 2009, Ontario spent $64per person on aordable housing, comparedto the average among all provinces o $115per person (Source: Michael Shapcott, Wellesley

Institute (March 23, 2011)).

Ontario now provides less unding or publicprograms and services rom health care toeducation, rom justice to disability benets thanany other province in Canada (Source: OntarioMinistry o Finance, Ontario Budget 2012).

This underunding o public services is especiallybewildering given the positive economic contribution

o public service spending. The Centre or the Studyo Spatial Economics, in its report Budget 2012 andthe Public Sectors Contribution to Ontarios Economy,uses Statistics Canada research to calculate the

economic value o public services. It ound that orevery provincial government dollar spent on servicessuch as health or education, 87 cents is added toOntarios gross domestic product (GDP). Contrast

this with just 61 cents o value added to the GDP oreach dollar o private-sector company spending onmachinery and equipment.

Make no mistake, we are still paying but ratherthan sharing costs proportionally based on income,Ontarians who can most benet rom public programs,

yet least aord to pay or them directly, are payinghigher user ees while receiving reduced services.

Myth 1

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Cutting the defcit willgrow the economy

Cutting our way to economic growth ailed as abudget strategy in the 1930s and it will not worknow. Reerring to the current decit obsession in the

United States (which is similar to our own), NobelPrizewinning economist Paul Krugman has said thedecit is a side-eect o an economic depression,

and the rst order o business should be to end thatdepression which means, among other things,leaving the decit alone or now.

The cut it and they will

come mantra soundseerily similar to thedrive to cut corporate

taxes in Ontario overthe past many years,to the eect that theprovince is now one

o the lowest taxjurisdictions in NorthAmerica. Yet there isno evidence to suggest corporations are repaying this

bounty through investments in Ontario to stimulateeconomic growth and create new jobs. In act, asBank o Canada Governor Mark Carney lamented

last summer, corporations are hoarding money ratherthan investing it.

I the private sector is not spending money andgovernments slash public sector spending, where

will the growth come rom? I there are not enoughOntarians with the means to purchase goods andservices the businesses providing those goods and

services, and their employees, will suer too. Thisundamental concept, which no less a capitalist thanHenry Ford grasped, is ignored at the governments,and the provinces, peril.

Myth 2The experts arenever wrong

The political conversation in the province oOntario is dominated by what is colloquially calledthe austerity agenda. This agenda is advanced most

orceully by oreign credit rating agencies, in spiteo a severely diminished level o credibility ollowingtheir role in the 2008 global nancial meltdown.

These credit rating agencies have no direct publicaccountability and many are aligned with and inthe case o Standard and Poors, owned by largemultinational corporate interests.

In act, a large majority o Canadians who hold aChartered Financial Analyst designation (71%)believe credit rating agencies such as Moodys

Investors Service, Standard & Poors, Fitch Ratings andDBRS contributed to the nancial crisis, according to a2011 Globe and MailCFA Institute survey. Moreover,more respondents ound debt ratings to lack credibility

(30%) than those who ound them sound (24%).

Yet it is not just credit rating agencies who areadvocating austerity. Many Canadian corporate voices

including those in the nancial services industry are continuing to publicly lobby or severe publicspending cutbacks while ailing to acknowledge theeconomic impact such cuts can have on economic

growth. The International Monetary Fund (IMF) wasrecently orced to make just such an acknowledgementin its paper Growth Forecast Errors and Fiscal Multipliers.Reerring to austerity measures in advanced European

economies such as Greece, the IMF concluded,in advanced economies, stronger planned scalconsolidation has been associated with lower growth

than expected.

Beore Ontario strips away cherished, eective publicservices, it is worth urther examining the credibilityo its most infuential advocates and ensuring all

Ontarians have a say in the uture o their government.

Myth 3

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Cutting our wayto economicgrowth ailed asa budget strategyin the 1930sand it will not

work now


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Everyone is being asked to do their shareto reduce the defcit

Once we look beyond these myths and challengethe political and corporate conventional wisdomo what can and cannot be included in the next

provincial budget, new possibilities arise. A PeoplesBudget would address real issues concerningOntarians, such as these:

Spurring growth and job creationHard-working Ontarians want an opportunity to

participate in, and contribute to, a sustainable economythat benets all o us. Yet their best eorts are notbeing rewarded. Consider this act, revealed in The

Relationship between Labour Productivity and Real

Wage Growth in Canada and OECD Countries rom theCentre or Study o Living Standards: Between 1980and 2005, the median real earnings o Canadian workers

stagnated, while labour productivity rose 37 per cent.

Recent plant shutdowns, and job growth limited topart-time and temporary work, are having a chilling

eect on economic growthand putting urther strainon our public services.

There is absolutely arole or the governmentto play especially indiicult economic times

in spurring activityand helping to acilitatenew jobs.

The Jobs and Prosperity Council specically highlightsthe need or a comprehensive manuacturing strategyin its report Advantage Ontario. A comprehensiveindustrial strategy with a ocus on research and

development that leverages the provinces academicinstitutions and skilled workorce is an essentialand overdue rst step to Ontarios maintaining its

economic competitiveness and standard o living.The Province should also weigh opportunities toexploit lower electricity rates as a tool or economic

Myth 4

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Hard-workingOntarians wantan opportunityto contributeto a sustainableeconomy thatbenets all o us

This is an equitable idea with no basis in reality, aslower-income amilies have been paying more thantheir air share already. Consider that last years Ontario

Budget maintained corporate tax cuts while deliveringhundreds o program and service cuts that hurt Ontar-io amilies, particularly children and the most vulner-

able citizens.

There were cuts to public education and health care.Public sector employees, including daycare workersand school maintenance workers, were singled out

and risk having new labour contracts imposed onthem. Some arts program unding was eliminated,money to support environmental initiatives was

reduced, beneits and services or injured workerswere cut, and badly needed inrastructure unding wasdelayed. Ontarians relying on social assistance, public

housing, and other supports saw their circumstancesworsen in real terms.

At the same time, a modest proposal to raise income

taxes on Ontarios highest income earners wasbargained down to a two per cent increase on onlyindividuals earning more than $500,000 per year (ameasure supported by 78% o Ontarians according to

a Forum Research poll), with a stipulation directing allrevenue raised rom the new tax to the decit.

Beyond the myths


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development, carrying on the tradition o Ontario

Hydro. The Province can also build on and expand itssuccessul model o partnerships, including with theCentre or Research and Innovation in the Bio-Economy,which is working to promote the bio-wood industry

in Northern Ontario. Further public partnerships withconstituencies such as First Nations communities toshare in the development o natural resources could

lead to even greater success.

But rst the Ontario government must respond to

external threats to its capacity to nurture manuac-turing industries in this province. Modest measures

to encourage Buy Ontario procurement policies ormunicipal inrastructure development and to ostergreen energy job creation need to be pursued as

part o eorts to re-shore Canadian companies.These sectors o the economy are ripe or growth andcontribute positively to the provinces social andenvironmental well-being. There is a wealth o research

to indicate that the Provinces inrastructure decitand the looming impact o climate change demand apro-active government response. These are not only

public policy priorities that must be addressed; theyare also long-term economic stimulus opportunities.

In act, the government needs to embrace a green jobsstrategy with renewed vigour, building on its eorts

to date. As other jurisdictions across the country andaround the world begin to respond to the demand orrenewable energy and more ecient water systems

with their own home-grown industries, Ontario cannotaord to lose out on or mismanage this economicgrowth opportunity. In act, energy eiciencyinitiatives could double as an economic stimulus i the

provincial government would consider small nancialloans to homeowners to make energy eciencyretrots more aordable.

addreSSing income inequalityOver the period stretching rom 1981 to 2012,

Ontario experienced the largest change in incomeequality anywhere in Canada; in percentage termsthis came to 17.2 per cent. (Source: Lars Osberg

and Andrew Sharpe, Centre

or the Study o Living

Standards, Beyond GDP:

Measuring Economic Well-

Being in Canada and

the Provinces 1981-2010

(September 2011).) In a

wealthy province such asOntario, this is unacceptable.

Income inequality has

consequences that extendar beyond the devastatingpersonal impact on indi-viduals and amilies living

in poverty. For example,the social determinantso health can be negatively aected by incomeinequality, leading to greater usage o health services

at an increased public cost. Further, there is aneconomic cost to the province i it is unable toleverage the maximum contributions o all members

o society rom a single-parent or low-income amily

requiring aordable day care so they can work,to opportunities or skilled immigrants to enterthe workorce.

Real economic growth must also lit all boats. Thereality is too many workers temporary oreign workers,new Canadians, students are at risk o being

exploited. There is dignity in all work, but theprolieration o part-time, service industry jobs meansgovernment has to ensure airness in the workplaceor those individuals contributing to the economy but

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Over theperiodstretchingrom 1981to 2012,Ontarioexperiencedthe largest

change inincome equalityanywherein Canada


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not being airly rewarded. Increases to the minimumwage, protections or migrant workers, and support

or trade unions are all part o a necessary recipe toensure shared economic growth.

To eectively address and reverse Ontarios growingincome inequality epidemic, the Province needs to

consider policies specic to unique constituencies,among them greater pension protection or seniors,more supportive housing or people with mental

and physical disabilities and expanded aordablehousing generally, additional daycare spaces or single-parent and low-income amilies, lower tuition orpost-secondary education students, and greater

opportunities or new Canadians to enter the workorce.

preServing public ServiceSA strong economyrequires eective publicservices to ensure

stability considerthe basic necessity ore, police, ambulance,education, health and

justice services to maintain peaceul, unctioningcommunities.

Ontarians and Canadians receive a tremendous,quantiable benet through access to public servicesas well. As the Canadian Centre or Policy Alternativesnoted in its 2009 study Canadas Quiet Bargain: The

Benefts o Public Spending: Looking at Canadians in

median income households, their benet rom publicservices amounts to $41,000 equivalent to roughly63% o their total income.

Clearly this is a benet worth preserving. Yet politicallymotivated attacks on the value o public servicescontinue. Ontario is better than this. Access to services

that allow an aging widow to live comortably in herown home or a laid-o worker to be retrained or anew job or a racialized student to attend universitybenets not just the immediate recipients o these

services, but whole communities. At a time when manyOntarians are suering, and relying on public services

is not a choice but a necessity, it would be the worstkind o short-term thinking to cut back these services.

Finally, it is simply not enough to have public services:Ontarians deserve public services o the highest quality,

the kind delivered by dedicated public sectorworkers and proessionals who are respected by theirgovernment employer, not bullied and treated asscapegoats.

Fair taxationWe cannot have a serious discussion about ourprovinces inances without addressing revenue.

Ater years o massive tax cuts that beneted wealthyOntarians and corporations the most, Ontario is

losing out on $15 billion worth o revenue. Further, asAuditor General Jim McCarter noted in December,the provincial government is writing o $1.4 billion inunpaid taxes. This is no longer sustainable.

Last spring saw a concerted campaign by a

group called Doctors or Fair Taxation, who made theimportant point that air taxes were consistent with ajust and prosperous society. In act, the group noted

that in the 1960s when the marginal personal incometax rate was at its highest, the province and countryenjoyed record economic growth.

The province must consider new revenue tools thatbring balance and airness back to Ontarios taxationsystem. For a sustained period, the wealthiest amongus and rich corporations have been contributing less

than they are able, with negative consequences orpublic services and government budgets. Now is thetime to look at reasonable tax increases and theclosing o tax loopholes or Ontario individuals and

corporations that have disproportionally benetedrom economic gains and tax cuts.

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A strong economyrequires eectivepublic servicesor stability


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Moving forwardWhile the evidence against the rationale behindthe austerity agenda mounts, we should also notignore its incompatibility with the values that havedeined Ontario or generations: our empathy,tolerance and commitment to airness.

It is time or a budget that refects the ideas and hopeso hard-working Ontarians, not discredited creditrating agencies; a budget that restores the principle

o airness in our taxation system; a budget ocusedon jobs and economic growth, not austerity; a budget

that puts people rst.Over the next several weeks the Peoples Budgetcampaign will be holding community consultationsin nine cities across the province to gather eed-back on this green paper and to listen to the ideas

o Ontarians. The campaign will also provide

opportunities or discussion online and via socialmedia. This eedback will inorm a white paper thatwill be submitted to the Ontario government in late

winter proposing a positive, air and responsibleapproach to addressing the provinces economic,social and scal challenges a budget that puts theinterests o Ontarians rst, a Peoples Budget.

For more inormation, and to become involved, please visit www.thepeoplesbudget.ca

Follow us The Peoples Budget and @thepplsbudget and start the conversation #pplsbudget


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