The Hypocricy of Austerity

By Robert Green | Published August 9, 2014 by Ricochet

In a move that seems perfectly symbolic of the sort of politics his government represents, Quebec Premier Philippe Couillard announced this week that the five members of the government commission charged with reviewing government programs and recommending where to make cuts will be paid the tidy sum of $1.03 million for about eight months of work. Commission President and ex-Liberal cabinet minister Lucienne Robillard will take home $265,000 for explaining to average Quebecers where they must make sacrifices.

The message being sent here is unmistakable: Tough choices, sacrifice and austerity are for the common people, not Quebec’s elites.

rich_get_richerThough his government has been in power only a short time, this is not the first time it has sent such a message. The government’s first budget contained cuts to school boards that are likely to seriously affect the services provided by already underfunded public schools, while leaving the subsidies wealthy families receive to send their children to private schools untouched. Apparently it is for the children of Little Burgundy to shoulder the burden of repairing Quebec’s public finances, not the privileged children who live up the hill in Westmount.

In fact this message is nothing new. From the PQ’s “deficit zero” politics of the late nineties to the Charest government’s attempts to “re-engineer the state” in the 2000s, Quebec’s political leaders have for years been saying that average Quebecers need to make do with less, that government spending is “out of control” and that we as a society are “living beyond our means.”

In 2010, Finance Minister Raymond Bachand called for a “cultural revolution” of austerity. This revolution led directly to the longest student strike in Canadian history and the defeat of Bachand’s government. Now back from exile, and sporting a new leader, the Liberals are set for round 2.

However, a cursory examination of Quebec’s recent spending trends shows a very different picture. With the exception of a spike in stimulus spending following the 2008 economic downturn, Quebec’s expenditures as a percentage of GDP have been trending downward since the early nineties. Even at the height of stimulus spending in 2009-2010 Quebec was spending significantly less as a percentage of GDP than it was in the early nineties. This is hardly a picture of out-of-control spending.

So if spending is not the cause of our current economic predicament, what is? The answer lies on the other side of the balance sheet, in revenues rather than expenditures.

Beginning in the late nineties the Quebec government started down a path that, while lucrative for political parties in terms of winning votes, was extremely irresponsible for the province’s long-term fiscal health. The minute that government finances began to look the least bit rosy, rather than reinvest in public services or pay down debt, both political parties opted for tax cuts primarily benefiting the wealthiest members of Quebec society.

As Quebec think tank IRIS has documented, between 2000 and 2008 PQ and Liberal governments combined to deny Quebec $9.8 billion in revenues through a series of tax measures (both tax cuts and deductions) that disproportionately favour the wealthy. For example, the deep PQ tax cuts of 2002 provided the wealthiest Quebecers (those earning $75,000+) an additional $1,709, over six times the amount gained by the neediest (those earning less than $25,000). The Liberal tax cuts of 2007-2008 were even worse, providing absolutely nothing to households with $25,000 in income, $110 to households with $50,000 in income and a whopping $1859 to households with $150,000 in income.

Add to this $9.8 billion a cut to the tax on the capital of corporations (a move that provided little to small business but was a boon for large corporations and particularly banks), which cost government $1.9 billion, and we’re talking about a hole in Quebec’s public finances of nearly $12 billion annually.

To put this in perspective, consider that Quebec is currently planning $3.9 billion in spending cuts in order to arrive at a projected deficit of $1.75 billion. Had the government of Quebec not deliberately created a $12-billion hole in its revenues, or even limited itself to a $6-billion hole, we would not be talking about where to make cuts right now; we would be talking about where to reinvest our large surplus.

This $12-billion hole in the province’s public finances is the central issue facing Quebec society today and has been for some time. It is ultimately the reason why all of our lives are being made more difficult: why students are being asked to pay more tuition, why public schools are being hit with wave after wave of budget cuts, why most of us are now paying a new user fee for health care every year, why police and firefighters are having their pensions raided, why Quebecers on social assistance are having their benefits cut, why we’re all looking at a 3.9 per cent increase to our hydro bills this year. All of this is happening in order to pay for the billions of dollars in tax measures that disproportionately benefit the wealthiest in our society.

By attempting to hand the bill for their decade-long feast to low and middle-income families, Quebec’s elites are in the process of pulling off perhaps the greatest heist in the province’s history.

And rather than having us turn our attention to the true source of Quebec’s fiscal woes — tax cuts for the rich — much of Quebec’s media is encouraging us to blame each other. They want us to direct our anger over new health care user fees and Hydro Quebec rate increases towards protesting students and municipal workers. This is folly.

In the face of such a massive injustice Quebecers cannot afford to be divided, nor can we afford to passively accept this. We need to unite into a single movement with a single demand: make the wealthiest pay their fair share first. Before harming the quality of the public services we all rely on, before imposing or increasing a single-user fee that hurts average Quebecers, before violating collective agreements and refusing to negotiate in good faith with public sector workers, ask the wealthy to give back some of what they have taken from all of us over the last 15 years.

Of course this proposal will inevitably be met with hysterics about the rich picking up and leaving Quebec. If only our media showed the same sort of hysterics over cuts to social spending that ultimately harm our society’s most vulnerable. Regardless, this is just baseless fear mongering. The wealthy don’t flee the Scandinavian countries with their high taxes for a reason: The quality of life in these countries is very high. Because of their great public services and strong social supports, these countries have pretty much eliminated poverty and created some of the most happy, healthy, well-educated and prosperous citizens in the world. This is the model Quebec needs to be moving towards.

To do so we first need a social movement capable of shutting down the neoliberal austerity agenda once and for all. Because this is as much about user fees and the quality of public services as it is about public sector wages and pensions, this needs to be a movement involving more than just public sector unions. It also needs to involve student groups, community groups, civil society organizations of all kinds and individuals from all walks of life.

The alternative is to allow the government to divide and conquer: Last year it was students, this year police and firemen, next year it will be the public sector unions whose contracts are up for renegotiation. Imagine if all of these groups came together with ordinary citizens to speak with one voice and say no to austerity.

But more than that, the first step towards reversing Quebec’s great neoliberal heist is informing ourselves and others about the true source of our collective problems. Problems that have nothing to do with out-of-control spending and everything to do with a series of irresponsible tax cuts directed at those who needed them least.

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One Comment to “The Hypocricy of Austerity”

  1. Solidarity is indeed the only answer, both locally and across borders. Capital is international, so must we be.

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