Cutting the Deficit Shouldn't Include Cutting Jobs
Feb 06, 2010
Every provincial government in the country is currently trying to find ways to address deficits of varying severity.
Alberta has estimated that it will slash between $2 billion and $3.72 billion in spending when it tables a new budget on Feb. 9.
Ontario is in even more dire financial straits. With a deficit of approximately $25 billion, the McGuinty government recently informed public sector union leaders that all options, including unpaid mandatory holidays, are on the table as it prepares it’s budget.
Even Manitoba’s NDP government will be expecting its civil servants to bear at least some of the brunt of the cost-cutting in order to help them make up the province’s deficit of approximately $600 million.
For many governments the rationale is if you slash the public service (along with government contracts that create jobs in the private sector) you can eliminate a large amount of spending and make up the deficit, or a big chunk of it, very quickly.
However, if you look at the whole picture, this type of thinking just doesn’t make sense. Take Manitoba as an example. Cutting jobs and salaries from the province’s largest group of employees would hamper an already fragile economy. At times like these, keeping people working is good for the economy. We need workers spending money and paying taxes to get the economy going again.
This economic downturn didn’t happen overnight. And the solution to it won’t either. This is a marathon and not a sprint to the finish line. Drastic cuts in the civil service will only hurt the Manitoba economy and keep us in the recession longer than necessary.
The most important thing to remember is the current deficit in Manitoba, or any province for that matter, was not created by a single element, like public service salaries. It came about from thousands of expenditures, a global recession and a decrease in federal transfer payments.
To trim down the deficit with one swoop of the axe is unrealistic. Governments facing a deficit need to set out long term strategies with moderate revenue increases and discretionary spending reductions (that don’t affect jobs). To expect government employees to bear the brunt of the deficit reduction burden is simply poor fiscal planning.
Comments
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if they cut or freeze wages, I'll stop spending in Manitoba and spend more money south of the border. I've already stopped spending on luxuries in anticipation of this situation. It'll get worse before it gets better.
Greg - 2010-02-07 14:00
Reading Peter's report appears to contradict the content in the telephone survey I took last night, that survey appeared to have been written by an ex finance minister who is now the premier.
Jim - 2010-02-12 12:25