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Brandon Sun - PRINT EDITION

Conservative moves smack of ideology

A comment appeared in the Brandon Sun Sound Off section entitled “Kept My Eye On The Big Picture” (Dec. 5).

The comment makes reference to the recent byelection and describes the voter’s reason for voting for the Conservative candidate. That reason being the economic performance and status of Canada under the leadership of the Tories. In the absence of any discussion or explanation, it seemed natural to do some research to determine the legitimacy of the reason that the voter used in deciding upon for whom to vote. Should never have started!

Who can forget the Conservative mantra, “Jobs, Growth, and Long-Term Prosperity.” It began with the stimulus budget of January 2009. Who remembers that the budget was forced upon the Tories under threat of a minority government being formed by the NDP and the Liberal party? The threat was made because the budget that the Tories tabled in December 2008, after the election in November, made no reference and no response to the impending recession. A recession that the Conservatives adamantly and confidently denied during the election campaign. No one recalls that the Tories offered any thanks to the NDP or the Liberal party for making it possible for the Conservatives to tout their “leadership” in protecting the Canadian economy.

Since 2006, the government has played with Canada Mortgage and Housing Corp. regulations for CMHC-insured mortgages which arguably has significantly contributed to the high cost of housing, the potential for mortgage defaults and the resultant debt that would be placed upon the shoulders of taxpayers. Since 2006, the level of CMHC-insured mortgages and privately insured mortgages (for which the government has kindly accepted responsibility) has grown to almost $1 trillion. These are mortgages that are insured by the government through the CMHC. It is inconceivable that future mortgage defaults would ever reach 100 per cent of all insured mortgages. However, the government has exposed the taxpayer to a serious risk — a risk that would be precipitated by an increase in interest rates, a decrease in house prices, credit defaults, or combinations thereof.

During the period from November 2012 to November 2013, the Canadian economy created 171,400 jobs. Impressive! Except that during the same period 191,700 jobs were created in sales and services occupations. Some occupations lost 19,000 jobs. The issue — sales and services occupations are known to be low-paying jobs. What appears to be happening is the loss of good-paying jobs, replaced by lower-paying jobs. This appears to be the reality to which those being laid off from good paying jobs and most of our youth can aspire — low-paying jobs and the resultant effect on the economy.

Between 1980 and 2005, earnings for the bottom income group fell by 20.6 per cent. Earnings for the top income group increased by 16.4 per cent. Earnings, for the ones in between, were stagnant. There is no evidence that this trend has reversed or slowed. The average household debt load is, at present, at an all-time high of 164 per cent. This suggests that, as costs of living are increasing, persons are using credit as a necessary supplement to their incomes. As well, individuals and families are increasingly using soup kitchens, food banks and emergency shelters to supplement their incomes. There is no long-term prosperity in this scenario. Future wages are committed to serving debts, when credit is no longer available, mortgage refinancing is no longer feasible, the cost of credit becomes too high.

Increasingly, higher-level income earners are obtaining their incomes through means that are not available to the average wage earner. In 2011, the top one per cent of income earners reported capital gains income averaging $60,000 (this does not include income from other sources). This compares to the median total income of the bottom 99 per cent of $29,300. It is almost obscene to mention the capital gains reported by the top 0.1 per cent, or, more so, the top 0.01 per cent. For the average wage earner, having sufficient capital to realize $60,000 in capital gains is but a fantasy. It is becoming apparent who will enjoy long-term prosperity.

To further insult the average wage earner, income from capital gains, dividends, and other investment vehicles are taxed at a lower rate than that earned through wages. As well, the current marginal tax-rate is 42.9 per cent for high income earners — almost half of what it was in 1948, the beginning of significant economic growth and prosperity. And let’s not insult the average wage earner by suggesting that he save and invest — low, stagnant, decreasing, lost wages do not make for an environment in which the average wage earner can save to invest.

The government’s mantra was that reducing corporate income taxes would result in jobs and growth. That has not happened. In 2012, corporations were sitting on more than $500 billion in tax savings with no indication they were investing in their businesses and, thereby, creating jobs. Instead, the savings are being used to pay higher dividends to shareholders (who are not the average wage earner), mergers, bank accounts, anything but investment leading to jobs. Data for the third quarter of 2013 may tell it all. Corporations spent $10 billion in increasing their inventory — stockpiling because no one is purchasing their goods. And while the corporations are accruing tax savings, they are laying off workers because of insufficient demand for goods and services.

The cuts to the GST have had more of an effect on the political fortunes of the Conservative government than on the pocketbook of both the average wage earner and the economy. When the GST was cut by one per cent, analysts calculated that the savings for a family earning $45,000 to $60,000 per year would be $650 per year. That is $1,300 for a two per cent cut. This, compared to $20,000 in savings for a person able to purchase a million-dollar house. Considering the weak consumer demand and consumption dependent upon credit, it appears that the GST cuts have not resulted in any significant gains for anybody.

One can be blasé about and even supportive of the reduced revenues for the federal government. However, there is a price to be paid. As revenues decline because of tax cuts, the Tory government can and does claim the increasing inability to afford programs and services without increasing government debt or, preferably, from its perspective, reducing government debt. The obvious effect that Canadians can see are the closure of offices, the removal of services, privatization of policing regulations (for example, rail safety, food safety, work safety), changing program and service eligibility criteria (like the CPP). The lesser understood but very noticeable effects are the costs which have to be borne at the provincial, local and individual level. These include infrastructure maintenance and construction, public and post-secondary education, health, safety, social support mechanisms. In Brandon we see these effects in the form of increases to PST, property taxes, education taxes, tuition fee hikes, city/municipality service fees, emergency food and shelter services.

This trend will continue and expand as revenues continue to decrease and the federal government continues to vacate public policy issues. These will necessarily include public health programs, public education, infrastructure, public health and safety. If these programs are to be maintained, the costs will be shifted to the provincial, municipal and individual level.

These are all conscious moves by the government. While they are propagandized as necessary cost-cutting measures, they smack more of an ideological objective. That being to reduce the footprint of government and let the market formulate all the decisions with respect to the economic well-being of Canadians and Canada. What is most disconcerting about the government’s actions is that there has been no public discussion (and Parliament has been effectively muzzled from leading the discussion) as to whether Canadians want this kind of society. Instead, the only rationale to pursue the objective of governmental minimalism and market superiority is presented in the context of affordability, ignoring the capacity and responsibility that exists among all Canadians and their financial and industrial institutions and creating undeserving and unsuspecting victims in the pursuit of ideological goals.

Should this be the “economy” that the voter envisions in support of his/her decision, then, this discussion is nothing but a lot of fluff to amuse the writers. And there is not much to look forward to.

Rosemarie and

Chester Letkeman

Brandon

Republished from the Brandon Sun print edition December 27, 2013

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The big problem is that we are relying on the two most unstable, least prosperity-generating sectors of the economy: consumption and the government actor.

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A comment appeared in the Brandon Sun Sound Off section entitled “Kept My Eye On The Big Picture” (Dec. 5).

The comment makes reference to the recent byelection and describes the voter’s reason for voting for the Conservative candidate. That reason being the economic performance and status of Canada under the leadership of the Tories. In the absence of any discussion or explanation, it seemed natural to do some research to determine the legitimacy of the reason that the voter used in deciding upon for whom to vote. Should never have started!

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A comment appeared in the Brandon Sun Sound Off section entitled “Kept My Eye On The Big Picture” (Dec. 5).

The comment makes reference to the recent byelection and describes the voter’s reason for voting for the Conservative candidate. That reason being the economic performance and status of Canada under the leadership of the Tories. In the absence of any discussion or explanation, it seemed natural to do some research to determine the legitimacy of the reason that the voter used in deciding upon for whom to vote. Should never have started!

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