Kevin Page Wallops Flaherty – With the Truth!

Workers are going to be pressured by the federal government and corporate bosses for years to come to defer wage demands, work longer hours and pay higher taxes to pay down a war induced federal structural deficit.  In spite of government denials, cuts to social spending are a certainty after the March 4th 2010 federal budget is tabled.  Cuts will be hidden in baffle gab but they will occur.

It is becoming clearer everyday why Harper prorogued Parliament.  The economy is in dire straits and the government doesn’t want to answer for its pro-corporate policies.

The January 13, 2010 Report of Kevin Page, the Parliamentary Budget Officer (PBO),[1] estimates that the Harper Conservatives have burdened Canadians workers with a huge structural deficit well into 2013. (Structural means it is permanent).  The debt is largely due to government transfers of public money to the banks to prop up a sagging stock market during the global financial crisis, to pay for the US-NATO war in Afghanistan and the half-a-trillion dollar Canada First Defence Strategy[2].  The CBC reported[3] that Page estimated in October 2008 that the war would had cost taxpayers $18 billion by 2011.[4]  All of the opposition parties including the NDP avoid talking about the war as a major factor in budget deficits.

Finance Minister Jim Flaherty cheerily predicted a year ago that the government in 2008 would post a structural surplus of $13.8 billion compared to the PBO’s more realistic $3.2 structural surplus prediction.  The latest PBO study shows that both were wrong and from an essentially balanced position in 2008 the country is headed for a structural deficit of $18.9 billion by 2013-14.  That is on top of the statement of the government last September that the country was wallowing in a $59 billion fiscal deficit that would take ten years to discharge providing there was an estimated annual growth of 2.5 %.

According to Page, GDP growth actually declined over the last year and predicted it would continue its slide at the rate of 1.9% between 2009 and 2014.  The economic recovery is a jobless profit recovery derived from government handouts to the banks and the Harper Governments order to Canada Mortgage and Housing to back all bank and mortgage loans[5] that has fuelled another mini-housing bubble with dire consequences for borrowers. Predictions are the interest rates will rise after a suitable number of purchasers have been induced to take out large mortgages.  

The Harper Government is encouraging Canadians to load up on mortgage debt when Canadians are increasingly relying on credit cards and lines of credit to finance day-to-day expenditures.  The CBC reported[6] the total national household debt in Canada has reached an all-time high of $1.3 trillion according to a report authored by the Certified General Accountants Association of Canada (CGA-Canada).[7]

Combined federal and provincial government indebtedness is rising rapidly.  According to the right wing Fraser Institute - no friend of labour - the net direct debt of all three levels of government in Canada fell from $800.4 billion to $791.2 billion between 2000/01 and 2004/05. This is a small drop compared to the growth since 1990/91 when net debt was $533 billion.[8]

Flaherty admitted today that he expects Canada to have a debt-to-GDP ratio of 31% in 2010, "way better" commented the Finance Minister, than some of its G7 counterparts.  Flaherty may have had in mind the USA where federal government debt is over $14.78 trillion with a debt to GDP ratio of 8.4%.  Small comfort to Canada tied closely to the US economy.

Undaunted by facts, Flaherty said he doesn't agree with Parliamentary Budget Officer Kevin Page's assessment that Canada could be contending with structural deficits.  He noted that the fiscal 2009-2010 federal deficit will exceed C$50 billion due to stimulus spending related to the recession, such as aid to the auto sector.  However, he predicted shamelessly that the deficit will be halved by 2011-2012 as the spending winds down - nothing like a political assertion to step around the facts.

The PBO attributes the $18.9 structural deficit to a sharp decline in Government revenues. The deterioration in the structural balance relative to potential income (in plain language, expenditures exceeding revenues), is attributed to the Harper government reducing corporate income tax, the reduction in GST.

Finance Minister Flaherty blithely rejected Page’s predictions simply asserting that the economic growth attributed to the government’s stimulus program will wipe out the deficit.  He also denied the government is contemplating raising taxes or cutting social programming.  Flaherty did say that the government will likely have to look at curbing program spending after the stimulus spending ends.  Freezing a budget as demand rises is a cut.  Flaherty didn’t mention if a budget freeze including the escalating costs of the war in Afghanistan - the dirty secret the opposition parties all step around. 

Labour’s answer to Flaherty has to be that wage earners refuse to bail the government out with wage cuts and longer hours of work.  The biggest stimulus to the economy is a policy of full employment and rising wages to increase purchasing power.

Capitalism places all of the purchasing power in the hands of capitalists and their joint bank accounts accumulated in Canada’s chartered banks, and increasingly within rogue capital without regulatory controls.  The money legal and illegal institutions hold is not theirs.  It is unpaid labour time, surplus value stolen from the Canadian working class over decades of exploitation.[9]

Now is the time for labour to launch a wage fight back.  A demand on government, the banks and the employers, that purchasing power in the hands of the working people must increase, appreciably and now.

Left Turn Canada!




[1] Office of the Parliamentary Budget Officer, “Estimating Potential GDP and the Government’s Structural Budget Balance”, Ottawa, Canada, January 13, 2010,,  

[2] Canadian National Defence, “Canada First Defence Strategy”, June 18, 2008,

[3] CBC News, “Canada's Afghan mission could cost up to $18.1B”, October 9, 2008,

[4] Office of the Parliamentary Budget Officer, “Fiscal Impact of the Canadian Mission in Afghanistan”, Ottawa, Canada, October 9, 2008,,  

[5] WC O’Casey, “Developing the Home Market in the Face of a Coordinated Attack”, October 13, 2008,

[6] CBC News, “Canadian household debt swells to $1.3 trillion”, May 26, 2009,

[7] Certified General Accountants Certified General Accountants, “Where Has the Money Gone: The State of Canadian Household Debt in a Stumbling Economy”, June 12, 2009,

[8] Milagros Palacios, Niels Veldhuis and Kumi Harischandra “Canadian Government Debt 2008 - A Guide to the Indebtedness of Canada and the Provinces”, Frazer Institute, May 2008,

[9] WC O’Casey, “Canadian Workers Labour 5 Years for Free”, July 12, 2009,