Spending Patterns Beg Questions on Austerity

February 15, 2012

Contents

Relevant Posts

Government spending pattens often reflect the philosophy upon which government officials shape and frame governing decisions. However, lack of spending on specific areas often draws a more powerful description of the priorities established that guide national policies. Yesterday, we published a compilation of statistics and articles outlining some examples of how patterns of government spending actually result in increased inequality in Canada.

Austerity would assume a careful re-evaluation of government spending, identification of essential services that need protecting while examining wasteful and unjustified spendings. Such analysis would, first and foremost, require objective data analysis and a meaningful discussion on national priorities. However, government-public discussions on spending have been limited, if not absent altogether. Canadians have had no chance to review proposed cuts, nor has the government provided a comprehensive analysis of the economic and social costs resulting from these austerity measures.

We are expecting 68,000 public service positions to be cut. What are the social and economic costs of these cuts? These job cuts are not exclusive to the public sector. Having advocated for low corporate tax cuts (lowest of all countries in G7) as the driving engine of job creation, the Conservative government has yet to provide us with an explanation of how these tax rates not only failed to create employment opportunities but also how the corporations that benefit from tax cuts are now attacking the working class through layoffs and lockouts.

There have so far been no measures of accountability for failed promises of low corporate tax rates. There have been so far no measures of accountability for unnecessary and often absurd patterns of government spending.

Conservative government spending patterns are often justified by empty rhetoric while being prevented from public scrutiny. Why are Canadians paying for multi-million dollar MP pensions when the same MPs are eager to strip Canadians of their benefits and pensions? We have a government that prioritizes pensions of politicians over those of Canadians, needless spendings on national security while the socio-economic security of Canadians is being threatened.

Certain spendings indicate not only our government’s ideological interests but testify to its fiscal irresponsibility:

The Harper government is spending $6.5-million of public funds to promote its tax-cutting record in an advertising campaign centred on what is shaping up as a key election issue.

The 11-week campaign, called “Tax cuts … working for you,” will run until March 27 – right around the time an election would start if the Conservatives were defeated over the March budget. But even though the ads mention Canada’s Economic Action Plan – the government’s two-year stimulus program launched in 2009 – most of the measures in the ad were announced in 2006.

Some of the tax cuts are so small, like the $4-million spent each year on the Tradespersons’ Tools Deduction, that the cost of advertising the tax cut is actually more than what the government loses to offer the tax cut.

“It’s hard not to see this as anything but government electioneering at taxpayer expense,” said Canadian Taxpayers’ Federation president Kevin Gaudet.

Meanwhile, the greater economic value of the very tax cuts that are featured in the ads – which the government describes as tax expenditures – is being questioned in a new report from the C.D. Howe Institute. [Globe & Mail | Feb 3 2011]

Oh, on advertising, there is more…

Taxpayers are shelling out $26-million over three months for all those Economic Action Plan ads the Harper government is airing on TV and radio.

A marketing specialist says the outlay is more cash than a big advertiser like Procter and Gamble would spend in a year in Canada. [Globe & Mail | March 13 1011 ]

Thus, our government is spending our money to sells us their rhetoric, standard brand marketing.

Ideological rhetoric adopted by the Conservative Government in regards to its austerity agenda is further exposed by the contradictions between proposed empty rhetoric and reports that clearly contradict our government’s statement:

Expert advice commissioned by the federal government contradicts Stephen Harper’s warnings that Canada can’t afford the looming bill for Old Age Security payments.

The Prime Minister and his ministers forcefully defended their surprise plans to review OAS on Monday, as the year’s first sitting of Parliament exploded with accusations from the opposition that the Conservatives misled Canadians during the 2011 federal election.

Mr. Harper held his ground, insisting Canada’s aging population means Ottawa must change the rules for future seniors to ensure it has the long-term cash to cut a growing number of monthly cheques. The Prime Minister’s decision to signal his planned pension changes while in Europe last week was partly to remind Canadians of the deep problems European governments are facing because of social programs they can’t afford.

But research prepared at Ottawa’s request argues Canada’s pension system is in far better shape than the Europeans’, and there’s no need to raise the retirement age. Edward Whitehouse – who researches pension policy on behalf of the Organization for Economic Co-operation and Development and the World Bank – was asked by Ottawa to study and report on how Canada stacks up internationally when it comes to pensions.

His conclusion: “The analysis suggests that Canada does not face major challenges of financial sustainability with its public pension schemes,” and “there is no pressing financial or fiscal need to increase pension ages in the foreseeable future.” [Globe & Mail | Jan 30 2012]

Calls for austerity are based merely on ideological assumptions, and thus, claims by our government need to be properly justified. It is becoming increasingly obvious that the government’s priorities are not to safeguard the well being of Canadians.

Is the Harper Government purposely wanting to acquire the F-35s to drive Canadians further into poverty?

The Pentagon this week confirmed it would postpone orders for 179 F-35s to save $15.1-billion and allow more time for testing. Italy announced Tuesday it would cut its order and Britain has said it will wait until 2015 to decide its purchase.

Acting Pentagon acquisition chief Frank Kendall told reporters on Tuesday that the U.S. decision and any delays in international orders would drive up the average price per unit of the F-35, the Pentagon’s costliest weapons program.

Likewise, in Oslo, Lockheed Martin Corp. executive vice-president Tom Burbage told reporters that the U.S. decision to drag out its purchases of the F-35 would increase the price of the plane somewhat.

“It will raise the overall average cost of the total procurement of all the airplanes bought,” Mr. Burbage said.

Prime Minister Stephen Harper was unmoved by the news, telling the Commons the Conservatives are sticking with the F-35 purchase and it would stay within budget. [ Globe & Mail | Feb 15 2012 ]

According to the Rideau Institute,

1. Since 2000-01, the year before the September 11, 2001 terrorist attacks on the United States,
Canada has devoted an additional $92 billion ($69 billion inflation-adjusted) to national security
spending over and above the amount it would have spent had budgets remained in line with
pre–9/11 levels. This has created a new “national security establishment,” which includes the
departments of National Defence, Foreign Affairs and International Trade, Public Safety, Justice,
and related organizations such as the RCMP, CSIS, and the CBSA.

2. In this fiscal year, 2011-12, Canada will spend $34 billion on its national security, which is an
additional $17 billion ($13 billion inflation-adjusted) more than the amount it would have spent had
budgets remained in line with pre–9/11 levels. This is an increase of 105% (60% inflation-adjusted).

3. Military expenditures have nearly doubled (90%) since 9/11 (48% inflation-adjusted), and the
Department of National Defence is by far the largest consumer of national security expenditures,
at more than $21 billion this fiscal year.

4. Security and Public Safety programs have nearly tripled in spending, from $3 billion to almost
$9 billion annually ($3.9 billion to $8.7 billion inflation-adjusted), or 186% since 9/11
(123% inflation-adjusted). [source]

Austerity is apparently only imposed on working Canadians. Allocation of resources clearly identifies our government’s ideological priorities benefiting specific corporations with whom our government has undemocratically signed contracts with [ Read our posts on GEO Group Inc. and CGI ].

When we speak of the Conservative Government’s infatuation with expanding prisons, military bases abroad, military weapons and machinery, surveillance programs, we must as a nation start questioning whether austerity measures are indeed necessary, and whether such policies are indeed just. But these programs are only to cost us more in the long run. When we do speak of costs, we should get into the habit of examining the human, social, economic and political costs of these projects.

The main shortcoming of the Conservative Government’s rhetoric on austerity is that it has failed to provide evidence that its measures are indeed necessary within the context of growing spending on all that is related to the establishment of a police state.

In order to break through the rhetoric of austerity and protect the interests of all Canadians, we must begin examining the ideological patterns of resource allocation.