Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Saturday, January 28, 2012

Harper: No more Mr. Nice Guy

And here we all thought Prime Minister Stephen Harper was going to Davos to lecture the Europeans about mending their profligate ways and learning from the hard-won experience of Canadians about how to manage their personal and national finances. Well, he did that - drawing from his five-year track record of deficit-spending, GST-cutting and frittering away the $13-billion surplus he inherited from the Liberals in 2006.

But the PM also issued a warning to Canadians that the good times are coming to an end for seniors, immigrants and anybody else dependent on the public purse for financial support. In other words, no more Mr. Nice Guy!

He told Canadians that they may have to work longer than 65 to collect Old Age Security benefits. He said immigrants will be increasingly chosen based on their ability to contribute to the Canadian economy, rather than for primarily humanitarian or family considerations.

He said energy policy will be dictated by the need of the economy, not environmentalists, First Nations and other "adversaries" to development. New mines and energy projects would be expedited and regulatory red tape cut in Harper's brave new world order.

What's not clear is the motivation and rationale behind Harper's radical reform agenda.

Is Canada in danger of falling ill to the European disease of under-financed, over-generous entitlements to the public? Well, not if you exclude MP pensions from the picture.

The Canada Pension Plan, thanks to reforms introduced in the 1990s by then finance minister Paul Martin, is actuarially sound. It doesn't pay all that much - a maximum of $11,800 per year - but at least it will be there when we need it.

Harper's right about one thing, though: Canada is getting older and Canadians on average are living longer. And as baby boomers gradually head for the exits in the labour market, demands on the public retirement income system will increase.

But how much will they increase and does the system require a radical fix - either in the form of drastic cuts in benefits or raising of contribution or age limits?

As mentioned, the CPP is fully funded and doesn't draw on government revenues. Funding OAS takes the equivalent of 2.4 per cent of the GDP, among the lowest among OECD countries. Italy, by contrast, spends 14 per cent of GDP on public pensions, up from 10 per cent a few years ago.

By 2031, as the wave of baby boomers reaching retirement age peaks, OAS's share of GDP will increase to 3.14 per cent, an increase of 0.73 per cent of GDP from today's level. One actuarial report says OAS payouts will increase from $36.5 billion in 2010 to $108 billion in 2030.

But, as UBC economics professor Kevin Milligan points out in a recent opinion piece in the Globe and Mail, "an increase of 0.73 per cent cannot be ignored, but neither is it disastrous.''

On the other hand, health care spending is expected to increase from 12 per cent of GDP to 18.7 per cent by 2031 - an increase of 6.7 percentage points. As Milligan notes, "in the fight for government spending dollars in 2031, health is the elephant and OAS pension is the mouse.''

Yet Harper has declared the health care spending "fixed'' by increasing federal transfers by six per cent a year until 2016-17 then tying increases to annual GDP growth, plus inflation.

Under Ottawa's plan, federal funding, which covers about 20 per cent of total health care spending, would climb from $30 billion a year in 2013-14 to $38 billion per year in 2018-19.

Of course, another solution to the health care and public pension funding crisis is increasing the number of taxpayers.

Currently, 60 per cent of Canada's population growth comes from immigration; by 2030, it will be closer to 100 per cent. Canada needs to increase its current intake of immigrants of 250,000 a year by three or four times just to maintain the current population structure.

So what's Harper's solution? Reduce immigration. Go figure.

Finally, why did Harper go all the way to Switzerland to have a fireside chat with Canadians about his plans to fix Canada for a generation? Isn't that what elections are for?

Original Article
Source: leaderpost 
Author: Bruce Johnstone  

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