In just a few short days, British Columbians will say goodbye to our party guests and turn back to everyday business. On Tuesday the government releases the 2010 budget; here’s hoping it contains some post-Olympics plans to “go for the gold” on environmental, social and economic issues.
The global recession took its toll on BC. While our economy is no longer contracting and we have seen some gains in part-time employment, we’re still far from pre-recession levels of employment or economic activity. We’re in for a long, slow recovery, and a series of spending cuts, starting with last year’s budget, has not only compromised much-needed social services but also removed an important source of economic stimulus. At this stage, any further cuts to public spending would be a grave mistake.
The notion that there is “fat” to trim from provincial programs and administration is a myth. BC’s public sector is already the leanest in the country, employing fewer workers per capita than any other province. In 2008, we had 89.7 public sector employees per 1,000 people in BC, compared to Alberta’s 90.4 and Ontario’s 99.6.
The last twenty years have seen a deliberate reduction in the size and scope of BC’s public sector. We have increasingly shifted away from using tax revenues to fund collectively-provided services. Instead, there is mounting pressure on individuals and their families to pay for education, seniors’ care and other needed programs. The result has been decreased economic security and increased hardship for the most vulnerable among us, well documented by the Canadian Centre for Policy Alternatives and community organizations across BC.
Now that government budgets have come under pressure from the recession and there are rumours about additional “belt-tightening” after the Olympics, it’s more important than ever to remind ourselves that the public sector employs a large number of hard-working British Columbians. In many rural communities, it’s now one of the major employers. Cutting public sector jobs and/or reducing public sector wages would reduce incomes for many households, putting a drag on the economy at precisely the wrong time.
There is absolutely no need to panic about the size of the deficit or our government debt. BC’s deficit is among the smallest in Canada when compared to the size of our economy (GDP). Only Manitoba and Newfoundland and Labrador are posting smaller deficits for 2009/10.
More importantly, BC does not have a structural deficit – our deficit is driven by the substantial declines in government revenues brought by the recession and will be eliminated once the economy recovers. Some groups like the Canadian Taxpayers’ Federation have claimed that the provincial government is overspending, but provincial spending as a share of GDP has steadily declined since the early 1990s and is now at one of the lowest levels we’ve seen for 30 years.
We entered this recession with a low provincial debt relative to GDP, which means that we’re well positioned to pay for the stimulus spending we need and still have some room to invest in programs that will have long-term payoffs for British Columbia. The debt levels projected for 2011/12 are quite affordable, especially at the current record-low interest rates (which remain the one silver lining of the global financial crisis).
Trying to reduce the size of the deficit by cutting spending on the heels of a deep recession is short-sighted at best. At a minimum, the recent cuts to gaming grants and government ministries should be repealed to provide adequate funding for schools, literacy programs, services for children and families, environmental protection, arts and culture and other important programs and services.
There are much more serious problems facing BC than the size of the deficit. British Columbians need their government to come forward with a post-Olympic vision for the province that would articulate a new rural development strategy, and address BC’s persistent poverty and growing income disparities, the lack of affordable housing and the looming climate change challenges.
If the Olympic Games have taught us anything, it’s that large, complex projects can be accomplished within a relatively short timeline when the political will is there. Setting ambitious goals should not be restricted to sports: let’s create the type of socially, environmentally and economically just society that most British Columbians want for themselves and their children.
Iglika Ivanova is an economist and public interest research at the Canadian Centre for Policy Alternatives’ BC Office, and author of BC’s Shrinking Public Sector (available at www.policyalternatives.ca).