Within a few weeks the Harper government, having seen the light, according to gullible journalists who have swallowed the Tories’ pre-budget spin, will table a budget which might result in a $40 billion deficit.
However, the Tory government is clearly not the government that Canadians need to govern the country in this deep recession.
Why? Because the Tories are still reactive, behind the curve of developments, locked into an ideological mindset which concentrates on avoiding deficits rather than priming jobs, and offering solutions which are just not going to work.
Given that, let’s hope that the NDP is prepared to table an amendment to the Tory budget which gives Canadians a view of an alternative. The NDP could model the alternative budget on the progressive principles set out in the Accord signed by the Liberals and NDP, which provides for a coalition LPC-NDP government to take over if the Tories do not address the deepening recession in a reasonable way.
It is becoming clear from recent statements by Harper and Finance Minister Flaherty that the Tories are still locked into their ideological fixation about balanced budgets. Flaherty is on record as saying that the Tory government won’t undertake long term deficits, and will be paying a lot of attention to methods to cut the deficits (read: cutting federal government spending and provincial transfers, and so putting Canadians out of work).
Also, the Tories are missing the boat by concentrating on the wrong target, which is credit:
“Mr. Flaherty repeated that the No. 1 concern he is hearing in his pre-budget consultations is access to credit and financing. “We quite frankly need the banks to help fill that gap,” he said, noting that a working group including bankers and representatives of the Crown corporations involved in credit is meeting today. “We hope that the private sector will work well with us to help fill those credit gaps,” he said. “We're prepared to work with the banks to do whatever we have to do to increase the availability of credit in Canada,” including car financing, he added.”
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20090109/flaherty_recession_090109/20090109?hub=Canada
Wake up, Mr Flaherty! The problem is not just the reduction in credit. It is mostly in the reduction of consumer demand.
Ordinary Canadians and Americans and Britons and Germans and Japanese and Koreans and Italians and others are not buying as much.
And why are they doing that? Because they have seen and experienced a dreadful meltdown in the financial and real estate markets, followed by a massive increase in the number of people losing their jobs. The unemployment rate is increasing everywhere, due to companies facing reduced demand for their products and cutting jobs, by downsizing, layoffs, non-hiring, hiring temporary jobs to replace permanent ones, firing.
And that wave of job losses is what is causing ordinary people throughout the world to fear that they, too, might lose their job, of have family or relatives lose theirs.
In such a state of fear, people cut their spending, getting ready for hard times should they lose their jobs.
And this exacerbates the problem, causing more and more job losses as demand plummets.
What is the right way to treat this spiral of disaster?
Not the way Ignatieff and Harper are proposing.
A budget with tax cuts of a few thousand dollars per person just is not going to solve the main problem: the fear of losing your job. If you get one or two or three thousand of dollars of tax cuts, how on earth does that reassure you that your job (on which you depend to pay your mortgage, buy clothing and food) is safe? How one earth is that minor tax cut going to encourage you to buy a new car or a new house, and so create demand for products and increase employment?
Sorry, Messrs Harper and Ignatieff: you are both barking up the wrong tree.
What all these economies need is a massive priming of the job market, through the creation of new jobs by government spending on a massive scale. The stimulus should be aimed at creating new jobs and shoring up new jobs within six months, so that job layoffs stabilize and then drop, and unemployment does not rocket (in Canada, the last two major recessions saw unemployment over 12%, almost twice what it is today; that would be close to a million and half of the 13.1 million Canadians who are now working not having jobs).
So any meaningful budget should rely heavily on the federal government to spend (directly itself or through the provinces and municipalities) on shovel ready infrastructure projects (and other quick-starter projects, as I mentioned in an earlier post).
That takes us back to the NDP, LPC and Bloc. Let us hope that one of these parties is ready to table an alternative budget as an amendment to the Tory one, so that MPs will have a choice to consider, and not just be stampeded into backing the Tory government one because it is the only thing on the table.
Opposition parties are supposed to provide alternatives, not just criticize. And the Accord set out certain good principles which could be used to fashion an alternative budget which is a progressive centre one, and properly grapples with the big problem facing ordinary Canadians: will we have a job in a month’s time?
Jack Layton, we are looking at you to provide Canadians with hope.
