The austerity monster is back

fiscal-austerity

With the neo-Liberal Couillard government set to cut 2% of its public servants (roughly 1,150 employees), the austerity monster has once again reared its ugly head in Quebec.  Couillard is naturally rationalising removing public services on the grounds that balancing the budget in 2015-2016 is its top priority.  In order to do that he has announced among other things, a hike in day care prices for some parents (money that will not be reinvested in the program but will instead be used to pay down the debt).  That said, they have nothing planned for post-secondary tuition fees, a tacit admission that students who demonstrated in the summer of 2012, can claim at least a partial victory (traditionally this is the first place governments in Quebec went when they were looking to save money).

Now don’t get me wrong.  I get that provincial debt in Quebec is a problem.  Just not the crisis that President of the Treasury Martin Coiteux or Finance Minister Carlos Leitão make it out to be.  When approximately 10% ($10 billion) of your budget goes towards paying the interest on debts to your various creditors, it’s time to pull your socks up, and get your financial house in order.

On the other hand, the message (or broken record) from our politicians especially on the right is that we’re facing a massive fiscal collapse of Greek proportions if we don’t address the problem with an immediate radical austerity program, is just plain dumb.

The reality is that the goal of zero debt is basically a pipe dream, and the more important measure of fiscal solvency, even for most economic conservatives, is debt to GDP ratio (Quebec’s ratio is 43% of its GDP whereas Greece’s is currently around 161%).

As for Quebec’s deficits, the current one is slightly over 1 billion dollars, representing about 1.08% of total government spending.  Not exactly the fiscal apocalypse.  That we need to reduce the size of our debt through more prudent fiscal management (including raising corporate taxes) is certainly true.  However, the idea that we need to do that by hurting important government services (like subsidized day care which actually generates revenue for the government) and drastically reducing the size of public service, otherwise were all going to hell in a hand-basket, is pure political propaganda.

This is, of course, the same message we get repeatedly from the Harper government and their allies in Ottawa.  But a recent policy brief put together by the Privy Council for the PM’s eyes only, obtained by an access to information request, suggests that our federal leaders actually know better.   The briefing note presumably seen by the PM last week, summarizes a recent report commissioned by the Australian government that makes the case against “across-the-board” cuts, of the kind that have become this federal government’s stock and trade.  Why?  Because the authors of the report believe that austerity is undermining public confidence in public institutions and the services they provide.  What’s worse, they actually might be counter-productive.

This is because the report finds that a lack of skilled public servants results in a diminishment of operational capacity, making it even more costly for governments to recruit and train new staff from the private sector to run their departments (e.g. so called “casual employees,” been their done that).  The report also recommends more targeted audits of specific areas of the public service that are problematic and a more careful approach to managing the size our public sector that would have less impact on the interactions between public servants and the average citizen.

Of course, the PM’s office would never comment on the specifics of the report, and issued the typical nonsense about saving taxpayers money through the streamlining of the federal public service, blah, blah, blah…..  Could this be because the Harper government isn’t interested in finding government “efficiencies” as they always claim in response to criticism of their reckless approach to saving money?  Might there be some other, more cynical, motive?  Perhaps austerity is just a euphemism for a strategy of “starving the beast” (as Tories sometimes call the public service) designed to stigmatize it and the people that work there, in order to create a self-fulfilling prophesy that will ultimately make it impossible for the public sector to provide adequately for the needs of Canadians.  Then, when the latter inevitably turns against those institutions, their elected representatives demand more private sector solutions to the issues we face as a country.

One more thing, any politician that pretends that you can make cuts to the public service without their being some diminishment in the level of support for the public, is lying through their teeth or too ignorant economically to understand what this actually entails.

As the report says, “many politicians and parties institute across-the-board cuts…this allows them to claim credit for budget savings without taking responsibility for service cuts.”  Bingo!

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Other articles by David DesBaillets
Are Canadian unions divorcing the NDP?
Harper misses the point on calls for public inquiry into missing aboriginal women
Has the Harper government declared war on Canadian charities

Follow David DesBaillets on twitter: @DDesBaillets

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