Many Canadians were led to believe the Conservatives to be sound financial managers. October’s federal election was won, in part, due to their ‘reputation’ of being good with the books and their bold prediction that Canada would not slip into recession.
In the November economic update, Conservatives were stating that Canada would have a surplus federal budget. January’s federal budget projected deficit spending in record amounts. Finance Minister Flaherty’s admission that Canada will incur a $50 billion deficit for the fiscal year 2009 is not that surprising to anyone paying attention to the trajectory we have been on for the last decade or more.
For many years, New Democrats have been criticizing the corporate agenda that has been championed by successive Liberal and Conservative governments. Cuts to the GST – a measure that really only helps people with incredibly large amounts of money to spend; cuts to corporate taxes that reward the business elite while saddling everyday Canadians with cost of running the country are among the items New Democrats have opposed. It was changes to the Employment Insurance system in the 1990s, however, that currently undermines our ability to take care of our most vulnerable and hand-off a fiscally viable country to future generations.
Canadians well-remember the deficits that ballooned through the 1980s. Built on a foundation of Liberal largesse in 1970s and early 80s, Canadians at that time turned to the Conservatives under Brian Mulroney expecting sound fiscal management. What they received were record deficits.
The Liberals with three majority governments in the 1990s reversed the deficit trend by stealing billions from Public Service pensions, wiping out the huge Employment Insurance surplus, downloading federal responsibilities to provincial and territorial governments – pinching health care budgets to the point that it became difficult for Ottawa to enforce the Canada Health Act.
The budget surpluses that the Liberals railed off for years were financed by Employment Insurance premiums. These premiums no longer flowed into a pool that paid EI claims and had no effect on year to year budgets. This led people to believe we had surplus money available for corporate tax cuts and GST cuts. Short-sighted thinking that is biting us hard today.
Once the huge EI pool had evaporated there was no rainy-day fund for the conditions we are seeing today. The money was stolen with no consideration of future need. Now we must pay EI from general revenues and the current government is reluctant to do so. EI still takes in much more than it pays out. It has become a source of general revenues and can now be considered a tax on working and employing our citizens and not the social safety net it was designed to be.