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Cuts are coming in battle to tame deficits

The gravy train that delivered boxcars loaded with infrastructure money from Ottawa is about to be retired from service. Finance Minister Jim Flaherty has been signaling his intent to begin tackling the massive deficit, most recently taking aim at overly generous public service pensions.

Woolwich and Wellesley townships, along with most municipalities countrywide, have enjoyed the influx of stimulus money. With the recession over, the tap is being closed. Any local government that figured the good times would never end is in for a rude awakening, if not this year then next.

Leaving aside the federal government’s plan to take on the entitlements of its workers – some of it warranted, some of it undoubtedly driven by ideology – there remains a $56-billion deficit to tackle.

Canada is in a much better economic position to cope with that record deficit. Some economists argue there’s no need to take drastic measures just yet, especially as the economy could sag again, requiring more stimulus spending. That said, Canadians as a whole want to see the deficit slain: we’ve bought into that particular bogeyman.

A recent poll by EKOS Research shows we’re concerned with the deficit and want steps taken to deal with it. Only 10 per cent of the population wants the government to continue to run deficits, while 46 per cent are calling for cuts to services and spending. Fourteen per cent support higher taxes. A sizeable chunk, 30 per cent, didn’t have an opinion on the subject.

“It is a tribute to how sternly Canadians hold to their recent governmental tradition of avoiding deficits that running one next year was the least favoured option. … Some Canadians even prefer to see taxes raised than see the deficit continue as it is. The most favoured option in this poll is to see cuts to services and government spending,” read the EKOS report.

That kind of thinking is just up Stephen Harper’s alley. We can expect him to take comfort in those poll numbers as the Conservatives table their next budget.

While an outright attack on public sector workers makes little sense – witness the Ontario example under Mike Harris, many of whose colleagues are now in Ottawa – there is a sense that the economic pain has not been shared equally with the private sector.

There is an argument to be made that public sector spending is outstripping the productive sector’s ability to pay.  As the former depends entirely on the latter, the gap must inevitably cause upheaval as we question the value-for-money scenario: what are we getting for the cash we pour into the system? And how often can governments keep going to the well before it runs dry?

Having denounced the idea of tax hikes, the Conservatives appear headed for cuts. That will translate into fewer dollars for the province, which is struggling with a $25-billion deficit of its own. It’s no stretch to predict there will be little in the way of senior government money making its way to municipalities, which have already overburdened their own ratepayers. The chopping that will begin at the top will work its way through the system.

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