Public austerity: Why is Canada leading the way?
ocufa.on.ca – publications.ontario_university_report.gk (Vol.5, Issue 28)
August 31, 2011
Government spending cuts in Canada are planned to be deeper than any other advanced industrial countries, points out Canadian Labour Congress economist Andrew Jackson, even though the country’s balance sheet is healthier.
Data from the May 11, 2011 OECD Economic Outlook, shows that Canada’s net government debt in 2011 is 33.7 per cent of GDP, compared to an OECD average of 62.6 per cent. Our interest rates, moreover, are at historically low levels, so Canadian governments can float bonds paying three per cet or less.
As for the fiscal deficit, the total shortfall of Canadian governments is 4.9 per cent of GDP in 2011, compared to an OECD average of 6.7 per cent.
Government retrenchment in this country, however, will be deeper and more severe than the OECD average! Canadian governments are planning to cut spending by 1.1 per cent of GDP – thus laying off employees and letting fewer job-creating contracts – compared to an OECD average of 1.0 per cent.
Meantime, the current 7.4 per cent unemployment rate in Canada is higher than the 6.1 per cent rate before the 2008 economic crisis.
It’s not government debt or deficits that lie behind Canada’s economic problems; it’s the painfully slow recovery and a weak job market. The degree of austerity planned by Canadian government will only make matters worse.
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