Winnipeg Free Press - PRINT EDITION

Budget looks bleaker the deeper you dig

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Observers were not expecting anything more than a middle-of-the-road federal budget for 2014, but even so, Finance Minister Jim Flaherty managed to disappoint. Why then did the government choose to release a ho-hum budget when the country is focused on the Olympic Games? So we wouldn't notice how recycled and contrived it is? Maybe, but it could also be because if one digs a little beyond the official budget story, things begin to look a little bleaker than we're led to believe.

In spite of the government's claims that the Canadian economy is performing well, GDP growth is slow and strained as we've not managed to pull ourselves out of the aftermath of the 2007 recession. Two other indicators continue to cause concern. Household debt is now estimated at a staggering 163 per cent of household income, one of the worse ratios in the OECD, and unemployment is still higher than it was before the recession.

Jobs (or the lack of them) continue to be the story in Canada. Pre-recession, the national unemployment rate was six per cent (4.3 per cent in Manitoba). As of January 2013, the national rate was seven per cent, and Manitoba's was 5.6 per cent. Nationally, the labour market continues its uneven performance, with almost 46,000 job losses in December 2013. Only two-thirds of those losses were added back in January. Of further concern, December's losses were largely in full-time work and January's gains included 28,000 people who were self-employed. Even the reduction in the unemployment rate from 2009 until now offers cold comfort; 80 per cent of that reduction occurred because prospects were so poor that Canadians quit looking for work. We also know GDP growth is paltry, we have a large current account deficit and Canadian businesses are sitting on $572 billion rather than investing it, according to a CCPA study.

Why is the government balancing its books when by all indications, it should be stimulating the economy through smart spending? How does this approach affect Manitobans?

Although Manitoba's unemployment rate is lower than Canada's, we face particular problems this budget does not deal with. Unemployment rates do not include an estimated 400,000 discouraged workers, a number that would be higher if it included First Nations residents.

More than 15 per cent of Manitoba's population is aboriginal. It is growing more quickly and is younger than the non-aboriginal population.

The non-Métis aboriginal population between 15 and 24 years has an unemployment rate that is four times higher than non-aboriginal Manitobans, making it likely they will be under- or unemployed throughout their lives. They need targeted education and training to overcome obstacles keeping them from participating meaningfully in the labour market.

Despite united protest from the premiers, the budget delivered on a promise to bring in the Canada Jobs Grant as of April 1. Money will be removed from the existing Labour Market Agreement, which the province uses to fund community-based programs, such as BUILD, that help multi-barriered workers with little work experience.

We may breathe a sigh of relief that transfer payments to provinces have not been cut, but the freeze is in nominal terms only. Manitoba's growing population means there will be less spending per capita. The freeze translates into a further budgetary squeeze for the provincial government and puts vital public services at risk.

One of the few bright spots for Manitoba in this budget is the commitment to increase funding for First Nations education. Spending caps are set to increase from two per cent to 4.5 per cent. Although this increase has been far too long in coming, Manitoba First Nations students will begin to play on a more level field with other students.

Youth unemployment is another worry. Despite a promise to address the 14 per cent unemployment rate facing those aged 15 to 24, this budget does little. Of greater concern is the scarcity of good jobs for youth; many end up working part time in the precarious labour market. Nationally, an estimated 100,000 to 300,000 young people are working for no pay, simply trying to get a foot in the door. The 2014 budget promises only to fund 3,000 internships, barely scratching the service.

The understated and earlier-than-expected balanced budget sets the tone for next year's election budget. And maybe that's why this non-event budget was played so casually. Because given our sluggish economy, that move is taken directly from the austerity playbook, forcing lower government spending on crucial social programs such as health care and education ensuring continued woes in our labour market.

 

Lynne Fernandez is the Errol Black chair in labour studies at the Canadian Centre for Policy Alternatives, Manitoba.

Republished from the Winnipeg Free Press print edition February 13, 2014 0

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