canadian austerity

Discussion in 'Politics' started by Mav88, Nov 13, 2012.

  1. Mav88


    just curious

    Canadian liberals cut government services (healthcare etc.) and raised taxes in a ratio of $7 in cuts to $1 in tax increases in 1995 to save their economy

    Note that the canadian sky didn't fall with all those cuts.

    I could back a 7-1 ratio as long as enetitlements take a hit to make them sustainable, could you?

    This will not happen with americans btw.
  2. Ricter


    Canada lives and dies on commodity prices, and trade with the US. I suspect (I'm not certain) you'll see why the sky didn't fall if you look at the former for the mid-90s.

    Here's news from this morning:

    Canada’s deficit soars by $5 billion due to falling commodity prices, tax revenues
    Deficit to hit $26 billion as balanced budget target pushed back a year to 2016-17
    By Julian Beltrame, CP November 13, 2012 10:06 AM

    "OTTAWA, Ont. — Canada will miss its deficit targets in each of the next four years, because global economic weakness has carved into commodity prices and tax revenues, Finance Minister Jim Flaherty said today.

    "His Fall economic update showed a bottom line worse than many expected, with the deficit at $26 billion, up $5 billion from the March budget forecast.

    "Flaherty also said it will take a year longer than predicted to balance the budget.

    “Canada has clearly been affected by volatile and falling world commodity prices since the budget in late March,” he said in notes for a speech to a Fredericton business audience.

    “And the forecast of private sector economists is consistent with the view that world commodity prices will remain below the level anticipated at the time of the budget.”

    "Because of the weakness, the government expects revenues to be on average $7.2 billion below what it had counted on in the budget during the five-year horizon period.

    "Flaherty made clear that he remains on track in keeping government costs down. Program expenses edge down as a percentage of the country’s gross domestic product during the period.

    "But the numbers show the government can’t overcome the lower revenues, which were first noticed in the final accounts of last year’s budget period. They carry on this year and into future years.

    "Ottawa now projects its deficit will rise to $26 billion this fiscal year, which ends in March, as opposed to the predicted $21.1 billion. Going forward, the deficit is now projected at $16.5 billion next year, compared with the budget estimate of $10.2 billion, and $8.6 billion in 2014-15, as opposed to $1.3 billion.

    "The March budget anticipated a $3.4 billion surplus in 2015-16, but now Flaherty expects a $1.8 billion deficit that year. The new calculation is that Ottawa will finally show a surplus of $1.7 billion in 2016-17.

    "The projections do include a $3 billion margin of error, or so called “risk adjustment,” so it is possible that Ottawa could still come in on target if those risks do not materialize, or if the economy performs better than expected.

    "In his speech, Flaherty cautioned that the world is full of risks and again expresses concern about a U.S. fiscal crisis if Congress and re-elected President Barack Obama cannot come to an agreement before Jan. 1.

    "But he also said there is also some cause for optimism, in which case both the Canadian economy and government finances will improve.

    “Growth in Canada could be significantly stronger than expected if the United States policy-makers are able to reach an agreement to avoid the fiscal cliff in 2013, while implementing a medium-term plan to reduce their debt and deficit,” he said."
    © Copyright (c) The Vancouver Sun
  3. Mav88


    then maybe services should be cut again, what's your point? The canadians had a debt problem and fixed it with service cuts.
    They were export/ commodity heavy in 1995 as well
  4. Ricter


    Spending is being cut, moderately, as mentioned in the article.
  5. Mav88


    I do not think we are Canada and it would not be as simple, but certainly the only voices of fiscal reason we have are coming from the tea party and there is NO movement at all from the left... more from Forbes this last summer...

  6. <IMG SRC=>

    <IMG SRC=>

    Ye olde let the currency depreciate along with relying on a booming US economy to export their way out.
  7. Mav88


    you did notice that the scales don't line up right? The loonie was tanking pre crisis and that was part of the problem to be addressed, it appeciated 1992-2002 and their economy recovered. You seem to be saying it depreciated.
  8. That's the trick with reading currency charts, up does not necessary mean appreciation. The scale is the amount of canadian dollars it takes to buy one american dollar. If it takes more canadian dollars to buy an american dollar, then the canadian dollar is depreciating relative the american dollar.

    Example that's more familiar:

    <IMG SRC=>

    The scale is US dollar to Euro. The Euro appreciated against the dollar since 2002. The rise means it takes more american dollars to buy a Euro because of the dollar depreciation relative to the Euro.
  9. Mav88


    of course, you are right
  10. Max E.

    Max E.

    Canada has a MUCH HIGHER personal income tax rate, as well as a national sales tax rate, and zero army, also Canada capped salaries in the healthcare industry, and learned to ration healthcare over the years, keeping healthcare costs much lower than the states, at the same time we got a much shittier product.

    And guess where Canada is headed in the next 10 years? Exact same goddamn cliff the U.S. is. Yet liberals for some reason can not see the fact that spending is a problem, and the social safety net is doomed.

    Accenture Report: Canada Economic Growth Won't Match Demand For Services

    TORONTO - Canada's federal, provincial and municipal governments must be prepared to address a $93 billion shortfall by 2025 if they hope to keep pace with the needs of the country's rapidly aging population, a global consulting giant said Tuesday.

    A report from Accenture said demands for public services will outpace Canada's economic growth over the next 13 years, leaving all levels of government unable to provide public services at present-day standards.

    The country's growing group of senior citizens would bear the brunt of the shortfall, Accenture said.

    People aged 65 or older currently make up 14.1 per cent of Canada's population, according to Statistics Canada. Accenture projects that number will increase to 20.6 per cent by 2025.

    Joel Marchildon, a managing director in the federal group at Accenture Canada, said this demographic trend does not bode well for the public purse.

    "That portion of the population just does demand more in terms of public services," Marchildon said in a telephone interview from Ottawa. "That's what's going to largely create this gap. We're going to have more people in that age bracket, and delivering services to that group is going to increase in cost."

    Canada currently spends about 28 per cent of its gross domestic product on providing public services such as health care, pensions and social supports that benefit the country's seniors, Marchildon said.

    GDP is on pace to grow 2.3 per cent between 2010 and 2025, but the report found that wouldn't be enough to sustain the country's elderly residents.

    Provinces and territories spend an average of $10,700 on people over 65, more than five times higher than the average of $2,000 required to care for those 64 or younger, the report said.

    Marchildon said Canada would need to spend a larger chunk of its GDP in order to maintain the status quo. Programs are expected to cost $745 billion, or 32 per cent of GDP, by 2025.

    Canada's total expenditure gap of 4.1 per cent of GDP is third highest among 10 countries analyzed for the report, trailing only the United Kingdom and United States. Italy boasted the narrowest gap of 1.3 per cent.

    Marchildon said Canada's governments are well-positioned to address the shortfall if they commit to long-term cost-cutting measures.

    The report found that reducing inefficiencies at all levels of government by 0.9 per cent each year would be enough to close the expenditure gap by 2025 and provide public services that stack up to today's standards.

    Marchildon said the onus is on the public sector to avoid widespread tax hikes.

    "We have to get smarter about how we deliver services to help close that gap, because the alternative is really either raising more revenue or changing the services and level of services that are available," he said.

    Marchildon said Ottawa has already taken steps to streamline its operations by creating departments such as Shared Services Canada, a centralized information-technology provider that aims to bring all ministries' infrastructure needs under one roof.

    He also singled out Ontario and British Columbia as provinces that have laid the groundwork for effective cost-cutting strategies, adding the rise of digital government would likely help most jurisdictions follow suit in time.

    But not all observers believe cost-reduction is the answer.

    David Macdonald, senior economist with the Canadian Centre for Policy Alternatives, said Canada's business community is well-positioned to shoulder some of the burden.

    The changing nature of Canada's economy prevents tax-leery businesses from relocating too readily if corporate rates were to rise, he said. Companies that want to maintain access to the country's oil, minerals and other natural resources have little choice but to remain and do their share, he said, adding Canada's tax rates are already among the lowest among G-8 countries.

    "I don't see what the big reticence is. It's not actually a dramatic estimate across all levels of government," Macdonald said of the projected shortfall.

    "Increasing corporate income tax rates by about three or four per cent would cover that."
    #10     Nov 14, 2012