I would like to respond to the Canadian Taxpayers Federation’s article published December 31st, 2020.

To begin, “we are NOT all in this together.”  The assertion that we all have to sacrifice to save our province’s economy might sound heroic, but the truth of the matter is that working people have already been disproportionately, negatively impacted by many years of austerity measures and bad economic choices by governments, while the rich have gotten richer.

It’s time for some new approaches to a balanced economy – one that works for everyone.

It’s amazing that in the midst of a devastating global pandemic and economic crisis, before the recovery has had a chance to take hold, the same old right-wing voices are once again demanding cuts to public services, government layoffs, and wage rollbacks as the only solution to revive the economy.

History has repeatedly shown us that austerity and cutbacks are recipes for deepening economic hardship and inequality for working people and families who rely on vital public services, while high-income families and the wealthy escape unscathed.

In 2010, the Harper government‘s austerity plan resulted in a decade of slow growth in Canada, persistent unemployment and underemployment, and grinding insecurity and precarity; in fact the worst economic record of any federal government in postwar history.

The austerity budget of 2016 in Newfoundland & Labrador actually worsened an already fragile economy.

 Cutting wages and public spending in a weak economy is bad policy.  It’s the economic equivalent of inviting people to throw away their masks and drink bleach instead.

When joblessness and underemployment is high, private investment is subdued and businesses are failing due to lack of demand; cutting public-sector wages and reducing government spending will dampen economic growth, not accelerate it.

Through COVID-19, we have seen the economic benefits of expanded fiscal support -essential for replacing lost earnings, subsidizing wages and employment, maintaining viable businesses, and protecting the most vulnerable.

The CTF must have missed the memo.  Virtually, no credible economic institution recommends cutting wages and reducing spending when the economy is this weak.  The OECD, International Monetary Fund, World Bank, the Governor of the Bank of Canada, major business newspapers and leading economists all recommend maintaining or increasing fiscal support, not scaling it back.

Numerous reports have been produced proving the benefits of a universal, publicly funded, early learning child care program for families, women, children, employers and economic growth.

Tax cuts benefit the richest who already profit from loopholes, offshore tax havens, and lower taxes on capital income.  As tax rates on top incomes have fallen, and corporate tax rates have been slashed, the top one percent of income earners have taken the lion’s share of income growth and wealth accumulation.

The CTF’s slash-and-burn approach to program spending will only create a deeper crisis.  Substantial program cuts that result in greater unemployment will only serve to fuel outmigration, which will worsen our per-capita indebtedness and this sad, unproductive cycle continues.

When you find yourself in a hole, an axe won’t help but a ladder will.  Only by growing the economy, and increasing spending activity through decent jobs, will we see our public purse grow.  This in turn will support the public services we need and rely on.

Now is the time to take advantage of rock-bottom borrowing costs to stimulate activity, job creation and productivity growth through investments in childcare and physical infrastructure.

Provincial policymakers should ignore the siren song of the austerity hawks, listen to the economic consensus, and invest for the future.



Mary Shortall

President, Newfoundland and Labrador Federation of Labour