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A budget for the rich, by the rich

By: | April 21, 2016

Budget 2016 was not about making tough choices. It was about taking from the poor to protect the rich.

Hans Rollmann
To Each Their Own examines political issues impacting Newfoundland and Labrador.

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On April 14, 2016 Finance Minister Cathy Bennett announced the Liberal Party's austerity budget, one that disproportionately places the burden on low and middle-income workers to pay off the province's nearly $2 billion deficit. Photo by Brian Carey.

Well, Dwight Ball’s Liberals have cast in their lot with the province’s wealthy. Budget 2016 is an unmitigated disaster, one that doesn’t even mask the degree to which it targets the poor and the average Newfoundlander and Labradorian while privileging the rich. Fortunately, the public has responded in kind, with unmitigated outrage.

Let’s consider some of the key points that have emerged.

The electorate gets what it deserves. It doesn’t deserve this.

One of the questions often levelled against those who protest government policies is: ‘Well, we voted for them, don’t we deserve what we get?’ In actual fact, we did not vote for the policies represented in this budget. The Liberals campaigned on commitments for public spending, against job losses or cuts, and instead once they arrived in office claimed the fiscal mess left by the PC’s justified them breaking all their promises.

It does not.

The fact the fiscal situation is different from the rosy fantasy the Liberals apparently envisioned during their election campaign does not give them carte blanche to toss all their commitments out the window. Their options should be to either uphold their commitments and find ways to fund them, or to step down and submit themselves to a new election.

Allowing a government to blatantly lie to the electorate delegitimizes democracy. More to the point, it delegitimizes the government.

Budget 2016: Just plain mean

A lot of the opposition to the budget has been driven by the fact that it is neither a ‘tough budget’, nor a ‘difficult choices budget’ — it’s a just plain mean budget. Cuts have been levelled on the poor which do virtually nothing to generate significant revenue — they’re an out-and-out attack by the rich against the poorest in our society.

Consider the following:

  • Increasing collection of income and employment support overpayments, as though ripping the already inadequate benefits out of the hands of the poor is any kind of a solution.
  • The provincial government is taking over collection of defaulted provincial student loans from the federal government, because they think they can collect more money back from poor and bankrupted students. Again, saving the wealthy from paying their fair share by raiding the empty bank accounts of the poor.
  • Shutting down Eastern Health’s Central Kitchen site and providing sick patients microwaved meals instead.
  • Slashing medical transportation benefits “to clients living in an area serviced by a public bus system.” Areas serviced by a public bus system? They exist in this province? If the provincial government actually funded Metrobus to make it resemble a reasonable bus service, perhaps. But the notion of forcing critically ill seniors to scramble over unplowed snowbanks for half an hour to reach the nearest bus stop (where they will probably wind up waiting in the cold for the next hour for a bus) is nothing short of ludicrous.
  • Becoming the first province in the country to apply the HST to books, hurting not only our creative and publishing industries but compounding the effect of literacy cuts in recent years.

Such examples abound. The poorest in our communities are already paying more than their fair share of the bad decisions made by the rich in our government; making them pay more implicates them in bad fiscal decision-making they had nothing to do with. More importantly, it will increase their poverty and prevent them from ever escaping it.

And it could do worse. The budget eliminated the entire sports and recreation grant to the Sheshatshiu Innu First Nation Band Council at a time when there is a national crisis of Indigenous youth suicide and when sports and recreation are among the only things many Indigenous rural communities have to provide their youth.

It’s a budget of millionaires, and it will destroy lives and communities while wreaking havoc on this province’s economy.

Not just mean, but discriminatory and inequitable

The budget also targets groups that the provincial government already needed to be doing more to support. As St. John’s Status of Women Council Executive Director Jenny Wright has noted, the budget hits the poor hardest, and the majority of the poor in this province (as elsewhere) are women. With a 34 percent wage gap they are already disproportionately burdened. Women use higher levels of public services, which have been cut. The closure of four rural courthouses will impact women trying to escape situations of domestic violence.

Other cuts target people with disabilities, for instance shifting the Post-Secondary Training Services Program for persons with disabilities (which covered everything from tuition to tutoring and equipment aids for students with disabilities) into the Student Loan program.

Mental health takes a hit, as the co-chair for the Community Coalition on Mental Health recently outlined for CBC.

And government didn’t avoid targeting the province’s Indigenous Peoples, with cuts that will impact Indigenous communities in rural parts of the island and Labrador (the $75,000 cut to the Sheshatshiu Innu First Nation Band Council, the replacement of $93,000 in funding for core initiatives like food subsidies and youth programming grants with $50,000 in a vaguely outlined program that’s to “promote nutritional and artistic endeavours of Aboriginal Governments/Organizations in Labrador,” etc.).

Labrador: victim of Island elites

The disregard shown in the provincial budget for Labrador is appalling. Not only does the province continue to fund the Muskrat Falls project despite its proven danger to Labrador communities, but it continues to plow billions into the project (run by an agency whose management has been criticized vehemently by government even while its budget remains intact) while cutting millions from the people of Labrador.

From the cuts to Indigenous communities to the elimination of the Foodlift Air Subsidy, the total lack of respect for what should be an equal partner in this province is unconscionable. While Islanders march in protest on government offices, perhaps a fitting response to the budget for Labradorians would be to establish their own representative council and start exerting their own governance functions. So long as the Island’s elites continue pilfering Labrador for resources while starving and poisoning its people, Labradorians deserve every right to ignore a government that clearly does not respect them.

Dwight Ball’s flippant disregard for the law

A few weeks ago I wrote that the spread of austerity is associated with an erosion in the rule of law. We’ve witnessed a glaring example of that this past week, with allegations that Dwight Ball’s own business interests stand to benefit from the cuts he’s imposed in this budget. And even if his actions were not illegal, they certainly undermine public faith in the integrity of government policy-making.

 The public cannot take Ball’s posturing about ‘sharing the burden’ when he hasn’t taken the most simple steps to guarantee that he does not personally benefit from the measures his government has imposed.

While Ball has denied these allegations, the situation has exposed an even more shocking revelation that the premier hasn’t bothered to put his own companies in a blind trust. This is when politicians hand over the management of their businesses and companies to others for the duration of their time in office, so as to avoid potential conflicts of interest. Ball’s response is that he’s in the process of doing so. But why hasn’t he done it already? The fact that he’s been the leader of the provincial Liberals for over four years, and premier of the province for over four months, yet hasn’t bothered to take these extremely basic steps to avoid conflict of interest, reflects either utter contempt for the public trust or profound laziness.

The public cannot take Ball’s posturing about ‘sharing the burden’ when he hasn’t taken the most simple steps to guarantee that he does not personally benefit from the measures his government has imposed. The Opposition—whatever their own complicity in the current fiscal situation—is right to make an issue of this. It’s a huge issue, and is the sort of blunder which in a more honourable era would lead an honourable man to resign.

Of course, we shouldn’t put our total faith in blind trusts either. When you own a business, and you implement pro-business policies, you know it will benefit you. When you run private care facilities, and you privatize care-work, you know that you’re likely to reap benefits. That’s the grim truth beneath the façade of blind trusts, and is why we elect rich businesspeople into office at our peril.

What about the levy?

The levy is a regressive tax that takes more proportionally from the poor than from the rich. Someone earning $25,000 annually pays $300, yet those earning over $202,500 annually pay only $900, even if they’re a millionaire.

This has sparked outrage, yet we need to be careful. Some have already speculated that the levy is an intentional diversionary technique, designed to target public outrage while drawing attention away from the other cuts. It must not be good enough for government to repeal the levy — we must demand they repeal the broader cuts as well.

And in fact, the levy could be a good idea, if it were progressive, fair and used to fund social programs and public infrastructure. How could it be made progressive and fair? First of all, those earning below the average income in the province (~$52,000) should not have to pay anything. Secondly, it should be progressive, with those at the top paying a higher percentage of their annual incomes. For instance, under the current scheme someone earning $202,500 would pay $900. But if they paid the levy at the same proportion someone earning $25,000 annually pays (1.2 percent of their annual income), then by rights they should be paying $2,430.

More significantly, someone earning a million dollars annually should be paying $12,000. Danny Williams’ net worth has been estimated at $180 million (five years ago); he should be kicking in a little over $2 million to pay his fair share. That would be more than enough to single-handedly restore everything that was cut from the Seniors, Wellness and Social Development portion of the budget.

So let’s not let government get away with simply eliminating the levy. Let’s demand it be turned into a truly progressive levy that makes the rich pay their fair share.

Okay, it’s fine to complain, but what about alternatives? How do we pay the bills?

The most appalling thing about the situation is that there are plenty of much easier alternatives available than the unnecessary and counter-productive cuts instituted by the Liberals, which serve only to entrench and enrich themselves and their wealthy friends.

For instance, the “savings” (read: cuts) announced in budget 2016 amount to around $235 million (minus some administrative cuts that had little to do with public services).

Yet, as an economist told the Liberals during the budget consultation period, simply adjusting the personal income tax levels so as to come in line with those of Nova Scotia or Prince Edward Island could generate an extra $250 million, easily enough to avoid these cuts. And as we just saw, a truly progressive deficit reduction levy could have generated millions more from the rich who can afford to pay it.

Alternately, instituting a carbon tax was also predicted to generate $200 million.

The Liberals did neither.

In other words, the cuts are entirely unnecessary, had the Liberals followed the good advice they were given.

Instead, they chose to protect their rich friends (and selves), keep taxes on the wealthy down, and steal from the poor and middle-class in order to pay off the debts incurred by the wealthy in this government and its predecessors.

This is a budget of millionaires, and it helps the average Newfoundlander and Labradorian not at all.

Stand and fight

The budget has sparked a wide range of responses, from calls for protests and general strikes, to calls for youth to pack it up and leave the province. It’s even called for us to pack up self-government and declare bankruptcy, or do something similar to what happened with Commission of Government in 1934.

Well, that’s not the solution. In fact, in a lot of ways the current crisis can be traced back to that moment when we gave up self-government. That too was an era when the government was dominated by rich business interests who governed for themselves, not for the public interest. They too drove the government into near bankruptcy as they enriched themselves. And when the Dominion of Newfoundland teetered on the edge of revolution, they called in the British Empire to keep public order and put things to rights.

Around 200 people marched through the streets of St. John's as part of an April 16 anti-austerity demonstration in response to the province's 2016 budget. Photo by Justin Brake.

“A vital part of our maturing as a democratic society here in Newfoundland and Labrador must involve figuring out how to break the cycle of bad governments comprised of self-interested rich people.” Photo by Justin Brake.

The problem is that this prevented us from ever tackling our own internal problems, and particularly that recurring issue in our history: our tendency to allow self-interested business elites to worm their way into government and then pass laws that benefit themselves while wrecking democratic and civil society. And now here we are again.

A vital part of our maturing as a democratic society here in Newfoundland and Labrador must involve figuring out how to break the cycle of bad governments comprised of self-interested rich people. We need to establish a social contract in this province that limits the power of business and the wealthy once and for all, and one that actually empowers our local communities to enact the sort of ingenious initiatives that will diversify our economy and restore our prosperity and pride. This means stopping the current budget, most certainly, but that’s not enough: we need a farther-reaching social agenda that will smash these recurring cycles of boom and bust once and for all, one that will ensure a decent standard of living for all of us as we tackle that challenge.

So yes, let us stand and fight. We have nothing left to lose; this budget risks all the good things we have built in this province. This is our province, built on the backs of all of us, through our collective effort over the recent years, and through the struggles and sacrifices of those in our communities who came before us.

If you spend a decade building yourself a house by the ocean, and then one day the fellow from that mansion on the hill comes down out of his mansion and announces he intends to knock down your house because it’s obscuring his view, would you simply shrug and walk away?

No. You’d stand in their way, and do whatever it takes to protect that house you’ve toiled over.

It’s time for us all to protect this house we’ve toiled over.

Because unlike the rich, this house is all the rest of us have got.

Correction: An earlier version of this column stated the wage gap between men and women in Newfoundland and Labrador is 66 percent. In fact, according to the study where the author retrieved the data, women in N.L. earn 66 percent of what men earn, which means the wage gap is 34 percent.

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