The future of New Brunswick: James Clancy and Tom Mann say it's time for something completely different

'The Conservatives should not walk and talk like previous governments faced with the same economic challenges. They cannot simply turn to old solutions and stay away from seeking a new path.'

By James Clancy and Tom Mann

Fredericton (7 Jan. 2011) - The new Alward Conservative government now begins its work on New Brunswick’s economy. A major theme throughout the election for the Conservatives was “politics as usual” no longer works.

While it is still early, the Conservatives should not walk and talk like previous governments faced with the same economic challenges. They cannot simply turn to old solutions and stay away from seeking a new path.

Maybe it is time for something completely different in approach.

Listening to Don Drummond is one example of the old path. Drummond is one of the prophets of the old thinking. Drummond’s solutions to our government’s deficit and debt are freeze public spending for maybe as long as five years and/or raise the HST. He offered these “solutions” at the recent Economic Summit where he also said, "the next four years are going to be the worst four years of your life".

How ironic Drummond offered up the same old stuff at the New Brunswick Business Council’s “Future NB Economic Summit” which was looking for new ideas and approaches.
What didn’t work then will certainly not work now.

Better alternatives

But Drummond is a well-known economist, "a bit of a celebrity in his field, and a recognized 'elite' on the list of top influencers of social policy in Canada" (Globe and Mail 2008). While we won't hold that against him, we do resist his arguments that there are only two ways for New Brunswick to deal with its debt and deficit.

Freezing public spending at current rates means a real and dramatic cut in the level of service that the people of New Brunswick currently receive. This includes longer waiting times in emergency rooms, fewer teachers, fewer firefighters and longer response times for police and emergency responders to name just a few examples. We have seen this movie before when the federal government slashed social spending in the 1990s. On a global scale, we are seeing this played out on the streets of London, Dublin, Greece and Spain today.

On the other hand, David Ganong recently pointed out at the Economic Summit that the province's private sector had grown just 4% in the recent past despite the lowest corporate tax rate in Canada, cheap power and easy access to large American markets. Our economy requires both a vibrant public sector and a robust private sector economy.

Who will do the work if the public sector is reduced? A private sector which has consistently under-performed the past 20 years? How will this really foster true economic growth?

Drummond’s approach of raising the HST as a solution to addressing government debt is a tactic used by provincial governments all across the country with no success. HST goes up and government debt continues to grow. The true consequence of raising HST is more money leaves the pockets of people who need it the most. The more affluent have the resources to go elsewhere to buy their big ticket items and avoid HST.

Adjust corporate taxes

So, what would be something completely different which actually works towards the desired result of addressing debt while improving quality of life?

We feel the overall distribution of the tax burden is unfair. We believe the great majority of people already pay enough taxes. A new approach would strategize revisions to the income and corporate tax rates based on an open discussion of a fair taxation strategy. Government has a revenue problem and a fair taxation is long overdue.

According to data from the Canadian Centre for Policy Alternatives (CCPA) in the period from 1982-1992 the share of personal income for the richest of Canadians was 21% of the total income pie. That share grew to 25% of the pie from 1992-2004 and 90% of the gain in income share went to the richest 0.1% of the new Canadian super rich millionaires. This was done by lowering the effective income tax rate for this group by 11% while the rest of us got a 1% decrease. It was the largest wealth transfer in the history of Canada. This also helps explain why it is so hard today for average families to manage household budgets and personal debt.

To reduce government services means something. It means cutbacks in health care and education, continued inability to address poverty and homelessness, a slowing down of our ability to address our deteriorating environment and less resources and cash for cities despite increasing urbanization.

This is the new path

We have the ability to generate enough wealth. We do not have the ability to distribute this wealth effectively for a higher quality of life. This is the new path.

To do something completely different means we have to look at the income tax system and see how we could create a new model to grow our investment in people, community and economy. New Brunswick has the opportunity to be the first on this new path and create the environment and quality of life that would make New Brunswick a jewel in Canada.

James Clancy is President of the National Union of Public and General Employees (NUPGE).
Tom Mann is Executive Director of the New Brunswick Union of Public and Private Employees (NBUPPE/NUPGE).

NUPGE

The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE