He’s not Canadian

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Is Canada the cuts model? | ToUChstone blog: A public policy blog from the TUC.

Nigel Stanley at the TUC has some interesting comments to make on the claim that Canada could be the model of UK spending cuts:

But we should also avoid the popular view that cuts in Canada were painless. There is a very useful article in the latest Renewal by Andrew Jackson, the National Director of Social and Economic Policy with the Canadian Labour Congress. (You can read another version of the article here.)

Here are some nuggets:

  • Canada cut its deficit purely by spending cuts. Over eight years government spending fell from 44.2 per cent of GDP to 41.1 per cent — a whopping 12.2 per cent.
  • This meant the burden fell on the least well off. Between 1993 and 2001 the after-tax and benefit income of the bottom 80 per cent fell, while that of the top 20 per cent rose from 36.9 per cent to 39.2 per cent.
  • The big cuts occurred in working age and unemployment benefits and spending by Canada’s provinces (shades of cuts to local government here.

Jackson describes benefit cuts:

"Access to benefits was restricted, and the maximum benefit was frozen in nominal terms for a decade. Today, Canada has one of the least generous unemployment schemes in the OECD. During the current downturn, only one half of unemployed workers have qualified for benefits, and the maximum benefit is just 60% of average earnings. The average unemployed worker qualifies for a maximum benefit period of less than 9 months."

This sounds more generous than the UK benefits system before our deficit reduction begins (though the two systems clearly work somewhat differently).

If this was a fair and progressive cuts package, then I’m a Canadian.

No you're not Nigel. I know you're not.

But this is a foretaste of things to come.

Call it mass unemployment and widespread poverty.

Imposed by choice.