(CLC) Budgets are all about choices. With unemployment and underemployment still at very high levels and a shrinking middle-class, the federal government could and should have laid the basis for a sustained and broadly shared economic recovery.
The federal government should be taking a larger and stronger role in making the economy work for average Canadians, and developing policies that ensure that all Canadians can afford their basic needs in tough times.
Instead, we got a budget that cuts jobs rather than creates jobs; which attacks needed public services and social programs; and undermines rather than enhances retirement security.
As expected, the Budget cuts departmental budgets, by $1.8 billion this year, rising to $3.5 billion next year, and to over $5 billion per year from 2014-15. This is a 6.9% cut to the expenditures subjected to review, at the top end of the 5% to 10% targets which departments were asked to meet. On top of this, there are cuts to the previous path of defence capital spending.
The Budget also announces many very modest new spending initiatives, packaged under the theme of “supporting jobs and growth.” But the cuts far outweigh the new measures — resulting in a net program spending cut of $1.4 billion this year, rising to $3.9 billion next year, to $5.3 billion in 2014-15. By 2014-15, cuts will outweigh new spending by a factor of 7 to 1.
Each $1 billion of cuts to spending represents about 10,000 lost jobs, about evenly divided between direct federal government jobs and private and not-for-profit sector jobs supported by federal government purchases of goods and services. So, the overall negative impact of the Budget on jobs will be about 50,000 when the measures are fully implemented.
The Budget itself reveals that direct federal government employment will fall by 19,200 over the next three years.
The Budget makes only minor changes to taxes and will eliminate the now already small deficit by 2015-16. Total federal government spending on programs in 2015-16 will be 12.9% of GDP compared to 14.1% in 2011-12, a significant reduction, while revenues will be almost unchanged as a share of the economy as economic recovery gradually makes up for cuts to corporate taxes.