From one side of the country to the other, it seems as if our government institutions, federal and provincial, are retreating. Here in sa国际传媒, the province means to hold spending below the cost of living for the better part of a decade. Hiring is frozen, services have been reduced and pleas for assistance go unanswered.
University funding has been slashed in Alberta. Manitoba has cut grants to the arts.
Ontario and Quebec have both missed their deficit-reduction targets. Nova Scotia has axed a tax credit for university students. Adult basic education has been scaled back in Newfoundland.
And in Ottawa, Stephen Harper鈥檚 Conservatives are forcing ministries to underspend their budgets in a desperate attempt to break even.
The 2008 recession played a part. Every senior government in sa国际传媒 ran deficits after the downturn, and all but sa国际传媒, Alberta and Saskatchewan remain in the red (although the federal government is expected to avoid its forecast deficit this year). With the economy still struggling to recover, pressure to cut spending was inevitable.
But on a deeper level, this crisis has been long in the making. Government as we know it was built over four decades following the Second World War.
Between 1956 and 1996, the foundations of our social safety net were laid. Universal health insurance was enacted. Unemployment insurance was strengthened. Refundable child-tax credits were introduced.
By the close of this era, sa国际传媒 had become the modern, liberal state we take pride in. But a large part of it was built on debt.
Throughout those 40 years, despite several periods of strong economic growth, the federal government managed only two balanced budgets. The other 38 were all deficits.
Ottawa finally got out of the red in 1997, but only temporarily. Deficits reappeared in 2008 and continue to this day.
Thus, over a period approaching six decades, the government of sa国际传媒 produced just 13 surpluses, worth about $110 billion (in today鈥檚 dollars). The remaining 44 budgets were all deficits, totalling about $1.3 trillion. The provinces followed a similar path.
Whatever surpluses were achieved in good years were invariably wiped out, with a vengeance, in bad times. And the latter outnumber the former nearly four to one.
When government can鈥檛 pay its way over such a prolonged period, the blame doesn鈥檛 rest with the economy. Rather, the problem is scale. Simply put, the public sector has outgrown its revenue base.
One answer is to raise taxes. Two years ago, sa国际传媒 hiked the income tax rate for wealthy individuals and for corporations. MSP premiums have also gone up. Other provinces followed suit.
But with the Canadian economy sputtering amid the weakest recovery since the Great Depression, any serious resort to taxation is at best perilous.
That said, across-the-board spending restraint, of the sort we鈥檙e witnessing, is no solution. Everything is cramped and uncertain. Nothing is done well or on time.
If there is not enough money to go around, we should face that reality.
Full fund those services we really need and terminate some of the others.
But there is another issue. If government has overreached, it has done so in part because the private sector is missing in action.
Instead of playing a role in building the community, too many businesses are hoarding cash and paying obscene bonuses to managers while laying off workers. Good corporate citizens don鈥檛 refuse their employees pensions or health benefits, leaving the state to pick up the tab.
All of which is to say, the division of responsibilities in our social contract is badly out of whack.
Government cannot be the solution to all of society鈥檚 ills while others step out. Some rebalancing of duties is needed.
