Newfoundland and Labrador Federation of Labour

Transcription

1 Newfoundland and Labrador Federation of Labour 2017 Provincial Pre-Budget Consultation February 2017

2 Table of Contents Introduction... 1 Building An Economy Rich In Good Jobs... 3 The Public Sector Its Role and Value... 6 Public Private Partnerships Are Not The Answer... 7 Fairness and Reduced Inequality... 9 Progressive Taxation Sustainability Conclusion Summary of Recommendations Notes and References for Charts... 17

3 1 Introduction The Newfoundland and Labrador Federation of Labour (NLFL) represents 25 affiliated unions, 500 union locals and 65,000 working women and men in every sector of our economy, in every community in our Province. Our role at the NLFL is in the political arena. While our affiliates deal with collective bargaining and other issues with employers, the NLFL address the broader political issues on behalf of all workers in Newfoundland & Labrador with a focus on social, economic, and environmental public policy and legislative issues that impact all Newfoundlanders and Labradorians and their communities. For more than 80 years, the NLFL has worked to advance the rights of all working people. We advocate on issues such as occupational health and safety and workers compensation, retirement security, pay equity, childcare, labour standards as well as worker and human rights. The NLFL also advocates for a strong public sector, improved public services, along with public policy and laws that support our principles of social and economic justice including the overall wellbeing and welfare of all citizens. Our advocacy work involves engaging government at all levels about public policy, including legislative and budgetary options that bring fairness and greater equality to all. We welcome the opportunity to bring forward recommendations that we believe will help build a stronger economy for our province even in the face of current economic and fiscal challenges. We maintain that excessive spending on the public sector or public services did not cause the current fiscal situation in our province. We believe that slashing public spending in the face of an economic downturn will in fact delay any economic recovery, and put our economy further in a downward spiral.

4 2 We believe there are other options for government that are fairer, more equitable, and will build an economy that works for everyone. It is our hope that government will make sound decisions that are not based on ideology, but on a long term vision, that they stop imposing austerity measures, reverse the austerity measures implemented in the past year, and refrain from making any further budgetary decisions that disproportionately hurt a large segment of society, especially women, vulnerable workers, the poor, and middle wage earners. Through our engagement with our members and their families, and ordinary citizens (your constituents) over the past year, it is clear that people want to see a budget with a long-term vision that puts Newfoundlanders and Labradorians first, a jobs-for-all budget, that narrows the income and gender gap we are experiencing, and sustains our communities and our environment. We want to see a labour market and an economy underpinned by sound social and economic policies that will help build a more inclusive Newfoundland and Labrador (NL), a place where no one gets left behind.

5 3 Building An Economy Rich In Good Jobs Based on past experience both here and internationally, the focus of government should be on job creation and investment in times of recession and economic slowdown, not austerity measures that target public sector spending and job cuts. Newfoundland and Labrador is currently facing unprecedented fiscal and economic challenges driven by an economic recession and deflated commodity prices. However, making debt and the deficit the sole focus of fiscal policy comes with a great cost, especially to workers, their families, and our communities. Government s focus should be balanced and measured and should ensure that public policies do not worsen an already fragile economy. There are steps that government can take now to build a budget that puts people first, that creates employment and puts a strong economic foundation in place for when we emerge from this period of economic hardship. We need a strong public sector with strong public services more than ever when the economy is in a downturn. When the private sector cuts back on capital investment and hiring, and government follows a similar path, it creates an economy that produces greater debt, higher inequality, slow or negative GDP growth and declining consumer demand. The Conference Board of Canada, International Monetary Fund (IMF), and the Organization for Economic Cooperation and Development (OECD), among others have all reported on the long-term economic and social impacts of growing inequality on small and large economies. A recent OECD report entitled In It Together: Why Less Inequality Benefits All states: The evidence shows that high inequality is bad for growth. The case for policy action is as much economic as social. By not addressing inequality,

6 4 governments are cutting into the social fabric of their countries and hurting their long-term economic growth. 1 We are already seeing this in the NL economy after just one year of austerity measures. In addition to the loss of more than 600 public sector jobs, local private sector jobs have been lost in the past 12 months due to the closure of several businesses such as Scotsburn Dairy, Ballistic, Templeton s, and the Marystown Shipyard, as well as other small businesses located throughout the province. In addition, unemployment has increased dramatically and those least able to bear the load of austerity measures are being disproportionately impacted, adding to a growing income inequality problem. As the numbers below indicate, government s own forecast indicates unemployment increasing to 19.8% by 2019, a level of unemployment that will devastate families, communities and the economy. We need a budget and public policies that place local people and communities first, connects the dots between local resources and employment, recognize the role of the public sector and its linkages with the private sector, and re-enforce the importance of reducing inequality and stabilizing the economy in times of recession. 1 OECD (2015), In It Together: Why Less Inequality Benefits All, OECD Publishing, Paris. DOI:

7 5 Developing an economy with a focus on job creation will require less of a focus on industrial recruitment (and the boom-bust economy that comes with such investments) and a more balanced approach that brings an increased focus on local employment, local business, and creating higher demand for local products and services. We envision an economy that balances corporate interests with that of working people through more progressive labour legislation. Such an economy would have strong universal social programs, a living minimum wage, and a strong healthy labour market. We believe that this focus will indeed create a stronger, cleaner, more equal and sustainable economy in many ways for years to come. The NLFL recommends the following for building a job-rich economy: 1. Protect existing quality jobs in the public and private sectors in order to safeguard the foundation for current economic activity and future labour market and economic growth; 2. Add new jobs by establishing the conditions required for economic and employment growth through education and training, strong labour market policies, and economic diversification, with an emphasis on local development and value-added strategies that maximize and leverage existing resources; 3. Create good, green jobs through policies that protect the environment, reduce emissions, and lower the cost of living; and 4. Develop and invest in policies, programs and practices that will attract and retain young people and immigrants.

8 6 The Public Sector Its Role and Value Strong public services help build and sustain an economy, especially in times of an economic slowdown. In fact, in such times, it is the public sector that helps bring stability to the economy, supports the private sector and creates much needed employment. In times of prosperity the private sector generates economic growth through capital investment, spending, and job creation. When both the private and public sectors cut back the result is an economy with greater debt, higher inequality, slow or negative GDP growth and declining demand. Cutting the public sector as a means to lowering the current deficit is both shortsighted and damaging. When austerity measures are taken in an economic downturn, it is our most vulnerable citizens that bear the brunt of the impacts. Research has shown that investments in public services, especially in times when the private sector is retracting, yield economic and social outcomes far better than tax cuts or transferring public wealth into the private sector. It is critically important that we protect the public sector jobs we have; people and communities depend on the important services that they deliver. Government s current target to reduce spending in this upcoming fiscal year by over $240 million dollars will have farreaching and disastrous effects. Such a reduction in spending could bring with it the loss of over 3000 public and private sector jobs (direct and indirect). Removing

9 7 that much investment from the economy at a time when we are trying to emerge from a recession will have severe, long lasting repercussions. It is also worth noting that the delivery of public services in NL is both challenging and costly, complicated by an aging demographic and a small population spread out over a large geography. The delivery of these services comes with additional costs compared to densely populated urban areas. Bringing our public sector workers down to the average in Canada is a simplistic goal that doesn t begin to consider what it takes to provide quality services to our population. The direct, indirect and induced impacts of public sector investments cannot be understated, (research shows that public sector spending creates up to 20 times more jobs per dollar invested than oil and gas extraction and twice as many jobs as tax cuts). 2 These investments sustain and create employment, support regional economies, allow businesses to operate and sustain communities. According to StatsCan data for 2016, Newfoundland and Labrador already has the highest unemployment rate in Atlantic Canada, the lowest participation rate amongst both men and women, and the lowest employment rate. 3 Now is not the time for additional job killing austerity that will heighten an already precarious economic situiation. Public Private Partnerships Are Not The Answer Disguised as a silver bullet for current economic and fiscal woes, P3 s have been proven to be risky measure, with no cost savings for taxpayers. Provincial auditor generals across the country have documented the many pitfalls that come with taking valuable public services and handing them over to the private sector. 2 Diana Gibson and Greg Flanagan (2014) Newfoundland and Labrador Options for a Strong Economy. Canadian Centre for Policy Alternatives 3 Statistics Canada, CANSIM, table Last modified:

10 8 Placing the wealth generated by public services in the hands of the few in the private sector is a short term solution that brings long lasting risk. Simply thinking that the right lessons have been learned from the experience of other jurisdictions and adopting a position that this time we will get it right is just not good enough. In a recent report on privatization, The Canada-wide Failure of Privatization, Outsourcing and Public-Private Partnerships 4, Matt Siemiatycki - Professor of Geography and Planning at the University of Toronto identifies the following criteria to guide citizens and governments when evaluating whether to privatize a public service or asset. Regulation o Will privatization be accompanied by deregulation of rates, service levels, safety standards or environmental standards? Source of Effciency Gains o Are there sufficient opportunities for innovation, or will costs be reduced primarily through lower wages and the advantages of deregulation? Accounting for Transaction Costs o Privatization has considerable transaction costs - have these been accounted for in calculating the benefits of privatization? Suffcient Competition o Privatization advocates continually claim that robust competition will assure reduced costs, but public services and assets do not exist in a pure market environment. Public Interest o Can a public asset continue as a positive policy lever when under private ownership? 4 Canadian Centre for Policy Alternatives (CCPA) Saskatchewan Office Privatization Nation: The Canada-wide Failure of Privatization, Outsourcing and Public Private Partnerships

11 9 Community Participation o Are there suffcient channels for input from citizens and service users to be integrated into decisions about critical public services when they are owned and operated by private companies? We urge government to heed the warnings that have been issued by many Auditor Generals, and others, and rethink their position on privatization and P3 s. There is too much at stake. The NLFL recomends the following: 5. The Provincial Government should keep all public services in the public domain and refrain from using any model of privatization of public services. Fairness and Reduced Inequality A recently published study by the IMF summed up the impact of growing inequality on the economy: When economically disadvantaged people are denied an equal share of economic growth, that gap widens, because those on the bottom of the income scale tend to spend a disproportionately larger share of their income on basic needs like health care, education and food. Their spending tends to boost economic growth, but when they have less money, it drags down growth overall." 5 The last provincial budget took a step backwards in reducing inequality with austerity measures that disproportionately impacted women, vulnerable workers and lower income earners. Austerity does not work for these citizens. It becomes more difficult to find employment, evade poverty, and keep their heads above water. 5 IMF (2015), Causes and Consequences of Income Inequality: A Global Perspective Discussion Note, International Monetary Fund, Washington

12 10 We have the lowest minimum wages in Canada. According to Statistics Canada data for 2015, we also had over 69,600 workers working full time jobs for $15 or less in our Province. That represents 32.6% of the total workforce earning less than $15.00, putting them (and their dependants) close to or under the poverty line by any measure. Furthermore, we have out-dated labour legislation that makes it difficult to unionize (progressive labour laws and high rates of unionization have been proven to have a positive impact on reducing inequality). A recent study by the Canadian Centre For Policy Alternatives (CCPA) looked at the last provincial budget and completed a gender analysis on the austerity measures contained within. The report noted the following: Austerity budgets aimed at deficit reduction often disproportionately hurt the poor and working families. In particular, women, who typically earn less than men and utilize more government services, are negatively impacted. Specifically, vulnerable women, such as lone mothers, seniors and First Nations women, suffer the most when governments engage in drastic cutbacks in programs. Women in Newfoundland and Labrador already experience significant gender inequalities; for example, they earn on average $4/hour less than men. They have the lowest median income compared to women in any other province. 6 Key to addressing poverty and gender inequality are laws and programs like pay equity and childcare. The benefits of a public universal childcare program have long been debated in this country and the economic and social outcomes are indisputable. Spending on early childhood education has a huge economic impact: for every $1million that the Province spends on childcare, estimates are that we will see $2 million in GDP growth. 7 This does not take into account the contribution 6 Cyndi Brannen (2016). Through a Gender Lens The Newfoundland and Labrador Budget s Impacts On Women. Canadian Centre for Policy Alternatives 7 Sources: Informetrica Ltd, Centre for Spatial Economics, Finance Canada budget 2009 (p. 240)

13 11 such investments make to building a healthier, better educated, more inclusive and less unequal society. Legislated pay equity is long over due in our province. Pay equity legislation is recognized as a means to ensure we erase the gender pay gap in our province. The work that women and men do should be equally respected, valued and compensated. The labour movement has been at the forefront of this battle both federally and provincially. With only two provinces having pay equity legislation in place that governs both the public and private sectors, we will continue to advocate for the right to equal pay for work of equal value. The NL government can address the gender gap by making it easier for women to join unions, implement labour market policies that increase the participation rate of women, implement programs such as child care, and give greater access to education and training. Inequality is a significant impediment to economic growth and economies that fail to incorporate that reality into public policy development, end up adding to that problem with more citizens unable to participate in the economy. The NLFL recommends the following measures that can incorporate a higher level of fairness into the economy as well as contribute to lower levels of inequality: 6. Ensure that this budget and related fiscal measures are characterized by fairness across all income brackets and that the burden is spread equally, whether it be through progressive taxation, fee increases or labour standards; 7. Incorporate a gender and poverty lens to all budget processes, public policy, legislation, and programs; 8. Improve labour legislation and labour laws to reflect todays reality and protect workers rights on the job including the right to join a union; and

14 12 9. Adopt annual indexing of the minimum wage to the consumer price index (CPI) for NL, as well as a legislated review of minimum wage rates no less than every two years with the goal of making the minimum wage a living wage. Progressive Taxation Across the country and in all provincial jurisdictions, we are seeing governments of all ideologies adopt progressive tax regimes as a means to bring more fairness to society, reduce inequality, and maintain or improve public services. Fair progressive taxation has been proven to be more beneficial to society than regressive taxation. Taxes allow us to pay for and have safe roads, public accessible healthcare, good schools, and other public services. price we pay for democracy. Taxes are the Tax cuts over the past decade have cost the public treasury in excess of $4 billion dollars. As the above chart indicates, income earners at the top in NL pay less in taxes than the other three Atlantic Provinces. The mantra that low taxes stimulate economic growth, create jobs, and bring

15 13 other economic benefits is misplaced and bad for the economy in the long term. Regressive taxation simply breeds more inequality and higher corporate profit. Newfoundland and Labrador, despite adjustments on personal and corporate taxes in the last budget, has the lowest personal income tax (PIT) rates on high income earners and the lowest corporate income tax (CIT) rate in Atlantic Canada. If NL adopted the average PIT (as indicated in the above chart), and CIT rates of the other Atlantic Provinces we could generate over $200 million in additional revenue annually. At the very least, NL should be at the level of its neighbours with regard to personal and corporate taxation. The NLFL recommends the following: 10. Increase PIT rates to match the average of Atlantic Canada, especially on high income earners and increase CIT rates to equal that of Nova Scotia and Prince Edward Island; and 11. Conduct a review of all provincial taxes and fees to ensure that they are fair and progressive. Sustainability Sustainable development has been defined in many ways; in the United Nations World Commission on Environment and Development (WCED) report entitled Our Common Future it is defined as follows: development that meets the needs of the present without compromising the ability of future generations to meet their own needs. 8 In order to ensure a sustainable economy going forward, economic and social development must be aligned with environmental sustainability in a manner that 8 Iris Borowy, Defining Sustainable Development: the World Commission on Environment and Development (Brundtland Commission), Milton Park: earthscan/routledge, 2014

16 14 will result in reduced and declining greenhouse gases. A focus on sustainability helps ensure that we are building our economy with future generations in mind. Along with any climate strategy, we need a strategy that ensures a just transition for workers and communities. A just transition means that the burden of change that benefits everyone will not be placed disproportionately on a few. It means that the move to a greener economy will be supported by policies that will help everyone adjust and benefit, including workers, communities and the economy as a whole. It is important that we ensure the transition to a green economy is accompanied by labour market policies that target re-training and education, information on opportunities for entrepreneurship and growth, community development and that no one is left in a worse position because of the move to a low carbon economy. Environmental and climate change initiatives are being implemented in many jurisdictions with outcomes that help diversify the economy, create good green jobs, reduce poverty, and reduce green house gases. Most provincial jurisdictions that comprise over 80% of the Canadian population have some form of climate change strategy and carbon tax that is in place or about to be implemented. The NLFL recommends the following: 12. Develop and implement an economy wide carbon tax (in place of the existing gasoline tax) that is both fair and progressive. Use the revenue generated to support the development of green jobs and energy efficiency initiatives; 13. Promote the development of, and invest in clean energy. Facilitate access to the power grid for small clean energy initiatives; 14. Develop and implement a provincial green jobs strategy. Incorporate measures such as:

17 15 a) Energy efficiency and conservation; b) Renewable energy development (wind solar small scale hydro); c) Investments in sustainable transportation such as electric vehicles; and 15. Ensure policies and programs are in place to ensure a just transition to a low carbon economy. Conclusion The NLFL acknowledges the current fiscal reality in NL. We recognize that such fluctuations are cyclical and prices and economies do recover. Our province has used the natural resource wealth we have generated in the past to create a very business friendly environment. With the exception of Prince Edward Island, we have the lowest personal tax rates for high-income earners (marginal tax rate) in Atlantic Canada, and our corporate tax rate is a full percentage point below two of the Atlantic Provinces. Corporate profits as a percentage of GDP have never been better. There are other choices that we can make to lessen inequality, bring fairness to the economy while at the same time create good jobs and diversify the economy. The current downward slump in commodity prices cannot be brought to bear on the citizens of NL (especially those in lower income brackets) or public sector workers. We have learned through past experience that wage cuts, job losses in the public sector, and higher unemployment do not offset conditions brought about by low commodity prices. Implementing measures of severe fiscal restraint will not solve our budget issues but will only put us in a much worse position. We need a budget with vision, that puts people, families and communities first, one that will help the province emerge from this recession well positioned to move forward.

18 16 Summary of Recommendations 1. Protect existing quality jobs in the public and private sectors in order to safeguard the foundation for current economic activity and future labour market and economic growth; 2. Add new jobs by establishing the conditions required for economic and employment growth through education and training, strong labour market policies, economic diversification, with an emphasis on local development and value-added strategies that maximize and leverage existing resources; 3. Create good, green jobs through policies that protect the environment, reduce emissions, and lower the cost of living; 4. Develop and invest in policies, programs and practices that will attract and retain young people and immigrants; 5. The Provincial Government should keep all public services in the public domain and refrain from using any model of privatization of public services; 6. Ensure that this budget and related fiscal measures are characterized by fairness across all income brackets and that the burden is spread equally, whether it be through progressive taxation, fee increases or labour standards; 7. Incorporate a gender and poverty lens to all budget processes, public policy, legislation, and programs; 8. Improve labour legislation and labour laws to reflect todays reality and protect workers rights on the job including the right to join a union; 9. Adopt annual indexing of the minimum wage to the consumer price index (CPI) for NL, as well as a legislated review of minimum wage rates no less than every two years with the goal of making the minimum wage a living wage; 10. Increase PIT rates to match the average of Atlantic Canada, especially on high income earners and increase CIT rates to equal that of Nova Scotia and Prince Edward Island;

19 Conduct a review of all provincial taxes and fees to ensure that they are fair and progressive; 12. Develop and implement an economy wide carbon tax (in place of the existing gasoline tax) that is both fair and progressive. Use the revenue generated to support the development of green jobs and energy efficiency initiatives; 13. Promote the development of, and invest in clean energy. Facilitate access to the power grid for small clean energy initiatives; 14. Develop and implement a provincial green jobs strategy. Incorporate measures such as: a. Energy efficiency and conservation; b. Renewable energy development (wind solar small scale hydro); c. Investments in sustainable transportation such as electric vehicles; and 15. Ensure policies and programs are in place to ensure a just transition to a low carbon economy. Notes and References for Charts 1. Government of Newfoundland and Labrador 2016 Budget Speech, Restoring Fiscal Confidence and Accountability, April 14, 2016 ( 2. Canadian Union of Public Employees (CUPE), Submission To The Nova Scotia Minister Of Finance Pre-Budget Consultation, January 16, Diana Gibson and Greg Flanagan, Newfoundland and Labrador Options for a Strong Economy (2014) 4. Common Front NL, A Better Future - Building A Jobs-Rich, Fair, And Sustainable Economy For Newfoundland And Labrador (2016)