(Eng) Focus on... CANADA

esperanto (lingvoj@lds.co.uk)
Fri, 5 Apr 1996 12:37:04 +0200


Focus on...
CANADA

The results of the NAFTA are now becoming felt in Canada. One
obvious effect is the increase in exports, up in the past three years
from less than a quarter to more than a third of GDP. This has
increased the country's economic dependence on the US, which
absorbs about four-fifths of Canadian exports - something of a
mixed blessing for a nation long ambivalent about its relationship
with its powerful southern neighbour. Such dependence is,
however, an inevitable result of growing exposure to international
market disciplines.

In a nutshell Canada has been pawned to the international money
markets with an accumulated debt standing at $850 billion. The
percentage of this which is held by foreign interests exceeds that,
for example, of either Mexico or Brazil and in each case it is these
money markets which are calling the shots in getting the
government to impose structural adjustment programmes. Canada,
Mexico, France: the pattern is consistent.
What has happened in Canada is that just over a year ago the
financial evaluation companies Moody's and Standard and Poor
threatened to call in the debt unless the federal budget deficit was
cut. Paul Martin bowed to pressure and last February announced
the austerity budget the markets wanted.

THE FEBRUARY 1995 BUDGET

A profound economic crisis has now hit the country largely
caused by the budget which has provoked the most serious
recession in 30 years. Pressures from the US and Canadian
banking system have brought about higher interest rates and
budgetary debt has taken off given interest charges on public debt.
The results are as predictable as they would be in any third world
country - 45,000 civil servants have been shown the (federal) door,
western cereal producers are going to have to start to consider the
possibility of facing the global market on their own two feet and
the state is selling off the public silver in the form of the railway
system, Canadian National, which is to be sold on the international
money markets.
Bell Canada (telecommunications) has laid off 10,000 (one
quarter of its staff), the construction industry has been paralysed
and bankruptcies have gone as high as 7,000 per month at times.
In many Canadian cities property value has fallen by as much as
40% and in Ottawa unemployment is at 10.6% (the highest in 20
years). Montreal has had to get rid of many of its municipal
administrators. Quebec has a seen a rise of 60% in the numbers
receiving benefit over a period of five years whilst 17.4% are
living below the poverty line. It seems unnecessary to continue.
Despite an overall 9.4 per cent unemployment rate and weak
domestic demand, opinion polls show strong public support for the
austerity measures announced by Ottawa and many provinces in
the past year. However, some independent economists, such as Mr
Jim Franke of the Conference Board of Canada, a business and
policy research group, point out that more is in the pipe line. He
predicts that spending cuts planned so far will reduce total debt to
only 95 per cent of gross domestic product by the year 2000, from
100 per cent today. "We are only on step two of a 10-step ladder,"
he says. "The really tough slogging is yet to come." He also points
out that most cuts announced so far have not yet taken effect.
Whether public opinion has the stomach for all this will depend on
what happens when the axe falls and what is now talk of closures
of schools, hospitals and university departments becomes a reality.
Perhaps it is unlikely that the reaction will mirror recent events in
France but already there is the instance of Alberta, the first
province to slash its budget drastically, which recently bowed to
opposition to planned reductions in healthcare spending. However,
within the logic of the system financial market pressures on
Canada's debt-laden public sector make sustained spending cuts
unavoidable.

THE PROVINCIAL RESPONSE

The response on a provincial level has been more of the same.
Alberta is one example and was first off the mark in 'slimming' the
economy to make it more efficient, more competitive, more
'modern'. Under the conservative Ralph Klein hospitals are being
sold off to private US establishments and workers are taking
'voluntary' redundancy. Ontario usually leads the way but the New
Democratic (NDP) government of Bob Rae, which ran Ontario for
five years until June, tried to buy time with a "social contract" with
the trade unions to save jobs and limit spending, rather than slash
both. Other provincial premiers were chopping away. Klein was
the fiercest. In a 1993 election campaign, he promised to cut
spending by 20% in three years, nearly a third of it from health
care. Now, though, Ontario has a new Conservative government. It
is making up for lost time. Michael Harris came to power there last
year, beating both the NDP and the Liberals. He pointed to a
provincial debt that had tripled to C$97 billion ($70 billion) in a
decade of Liberal and NDP rule, and promised to eliminate the
deficit in one term, even while giving a 30% tax cut over three
years - a thatcherite dream no less. 20% of hospitals have gone and
despite the empty assurances of the NAFTA the long term goal
would seem to be to harmonise the Canadian health care system
with that of the US.
The new conservative government has proposed labour law
reforms which will significantly weaken trade unions' bargaining
power as part of the government's self-proclaimed "common sense
revolution". The draft legislation, which the government expects to
push through the provincial legislature quickly, is designed to
improve the business climate in Canada's most industrialised
province. And all this to halt opposition to spending cuts aimed at
reversing Ontario's spiralling public debt. The cuts include a 21
per cent reduction in welfare payments, closure of 25 "halfway
houses" for released prisoners and sharply reduced funding for
women's shelters. These measures were broadly welcomed by
business, but drew public protests.

WINERS AND LOSERS

So the people who will have to pay are single mothers and other
poor people on welfare: they found their cheques cut in October
1995 by 21%. A second chop came on November 29th, when the
finance minister, Ernie Eves, announced cuts of C$6 billion over
two years, spread across almost every field of spending. A tenth of
that is to come out of transfers to municipalities, which will
presumably pass it on by charging for services and leaving holes in
the road. Schools, already hard hit, are expected to trim another
C$400m without touching classroom costs. Universities and
colleges must find as much, which means heavy increases in
tuition fees.
The federal government, meanwhile, says The Economist, is
reving up its own chainsaw. On December 1st 1995, its human-
resources minister, Lloyd Axworthy, announced reforms of
unemployment insurance that will especially hurt seasonal workers
such as lumberjacks, fishermen and some teachers. The current
law was drafted in richer days 25 years ago. Mr Axworthy, by
repute the farthest left of federal ministers, has tightened the rules
to save C$2 billion, most of it, supposedly, to be spent on
jobcreation schemes. A cold Canadian winter indeed.
Resistance to all this can only simplistically be bracketed into
the separatist category. More traditional forms have taken place in,
for instance, Toronto where demonstrations targeting the issues
have taken place. Essentially Canada along with all G7 countries
seems too firmly locked into a global economy for solutions to be
found which go beyond the public versus private debate of the
establishment as the French are also discovering. Some factors in
the Canadian economy which may give cause for hope have been
reported in Freedom. Whether these will prove sufficient to make
some impact on a growing economic crisis with global roots will
be interesting to see.
---------------------------------------
sources: Financial Times (6/10/95)
Le Monde Diplomatique (Dec 95)
The Economist (19/12/95)
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FACT FILE: CANADA

Population: 27.9m
Population per sq. km.: 3
Human Development Index: 98
Average annual inflation (88-93): 3.8%
Main export destination: USA 77.5%
Cost of living (Sept 1993)
(New York=100): 86
GDP per head in purchasing power parity
(USA=100): 90
======================================
article taken from FREEDOM - current issue
84b, Whitechapel High St.,
London
E1 7QX

sample edition available on request from London.
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