Yesterday I sent a letter to the Winnipeg Free Press about an August 31st op-ed decrying Manitoba’s supposedly “bloated” public sector. The op-ed was just begging for a response. Let’s hope the letter gets printed, but in case it doesn’t, here’s the scoop.
The op-ed in question, authored by Eisen and Wensveen, is a shortened version of a report they did for the Frontier Centre for Public Policy. Both versions talk about Manitoba’s “unusually large” public sector, but upon examination of the data contained in the report, their alarm is difficult to justify. Assuming that their calculations are correct, they show Manitoba to be in upper levels of the middle of the pack. Their calculations show municipal public-sector employment and provincial and municipal-sector employment as percentages of total employment. If one removes the extremes from their data (Alberta and B.C. at 16 and 17% respectively; Newfoundland at 31%) Manitoba, at 26% is keeping close company with many provinces who are hovering between 22 and 27%.
But the fact that Manitoba does not stand out at all one way or another is not even the most worrisome part of their report. The authors do not explain why public-sector employment is in itself a bad thing. Their main argument is that public-sector employment causes unemployment in the private sector, which, if it were correct, would amount to no more than a red herring; it wouldn’t change aggregate unemployment numbers. They do not put their hypothesis in the context of the current recession which has seen the private sector shrink, with huge losses in employment. If it weren’t for public-sector employment, the economy would have shrunk even more than it did and the private sector would find it that much harder to recover.
Comparing public-sector wages and benefits with the private sector, as the authors do, sets off another smoke bomb. The public sector by nature includes highly-trained professionals such as nurses, teachers, engineers etc. who have to be paid higher salaries, especially when compared to “the lower wages, fewer benefits and less security” the authors admit are features of private-sector employment. The fact that these workers earn decent wages and benefits should inspire private-sector workers to demand more from their employers, not demand that others lose ground.
The authors also do not consider that Manitobans derive real value from the services provided by the public sector. In order for their conclusions be meaningful, they would have to include a comparison of the quality and quantity of services provided by the provinces’ public sectors. The median Canadian household realizes benefits from public-sector services that are equivalent to 63% of their private income. Significantly, the public sector gives low-income earners the tools they need to look after their families – thereby softening the debilitating blows of the low-wage, precarious employment the authors seem to be wishing on us all.
Lynne Fernandez is a political economist with the Canadian Centre for Policy Alternatives Mb.
PLEASE NOTE: The Brunch with Justice Sinclair has been cancelled, and will be rescheduled. Please stay tuned for more information.
Justice Murray Sinclair, the chair of the Truth and Reconciliation Commission, has graciously agreed to be a guest speaker at a CCPA-MB fundraising brunch in the Star Grill restaurant in the Assiniboine Park Conservatory. The theme of his presentation will be “Understanding the Legacy”. Seating is limited, so please order your tickets soon.
Fundraising Brunch with Justice Sinclair: Understanding the Legacy.
Sunday, September 18, 2011, 10am.
Star Grill – Assiniboine Park Conservatory.
Shauna MacKinnon wrote a Fast Facts last year about child welfare devolution and the opportunity presented by the Truth and Reconciliation Commission to both share and hear stories about Canada’s legacy of colonialism. You can read it here.
The PUB’s July 2001 Order regarding Manitoba Hydro’s proposed rate increase has received quite a bit of media coverage. Pundits have used it to suggest that the government is mismanaging Manitoba Hydro, but their arguments are not defensible, especially in the light of the PUB’s weak analysis regarding Hydro’s export plans and the need to make our own energy supply more secure.
This Fast Facts by Errol Black and Lynne Fernandez explains: 1. why the Order’s recommendations should not be adopted, and 2. how, by cherry picking certain details and ignoring important background information, some pundits have misrepresented both the spirit and context of the Order, allowing them to arrive at inaccurate and sensationalist conclusions.
On July 29, 2011, the Public Utilities Board (PUB) of Manitoba issued an interim Order denying Manitoba Hydro requests to “finalize existing interim rates and for an additional 0.9% rate increase for all customer classes, effective August 1, 2011.” The Order also notes that these requests “…will be further considered and may be adjusted on a final basis in a subsequent Order of the Board.”
The PUB report is a preliminary assessment of Manitoba Hydro’s future investment and development. The documentation supporting the report is extensive, but not complete. Missing are: “…export contracts, financial projections, alternative development scenarios and other information requested by the Board.” Apart from whether the PUB should have access to export contracts with Minnesota and Wisconsin [contracts that were available to the experts consulted by the PUB and therefore reflected in their testimony], which is to be determined in the courts, much of the information requested will no doubt be forthcoming from Manitoba Hydro.
The statement of findings deals specifically with the Keeyask and Conawapa generating stations and the Bi Pole III transmission line. Of particular concern are Manitoba Hydro’s plans relating to market conditions, pricing arrangements and risk management. While some of the questions raised in the statement may merit a response, the statement also includes observations that are acknowledged as highly speculative, and subject to qualification. At no time does the PUB state that its findings are in anyway definitive.
The investment and development plan referred to in the interim Order is one that Manitoba Hydro has been developing for the last decade. It includes major hydro-electric projects that will meet the growing needs of Manitoba and export markets. Wuskwatim, a $1.3 billion project, will be completed in 2012. Keeyask, a $5.6 billion investment, and Conawapa, a $5 billion project, are slated for future development. A new Bi Pole III transmission line ($3.3 billion) to accommodate increases in sales and improve the security of the system is planned for the west side of the province.
Following completion of the East Side Planning Initiative, the Province announced that it would not allow construction of transmission lines through the east-side Boreal Forest, and then announced its intention to protect the Boreal Forest and pursue a UNESCO World Heritage Site designation for the area. CCPA has explained in several publications why this strategy makes sense. The Keeyask generating station got the go-ahead in May upon completion of contracts with utilities in Wisconsin and Minnesota. It is important to note that since all such projects are subject to regulatory approval on both sides of the border, the Province must carry out an alternative hearing before final approval is given. If the project does get final approval, it will be completed by 2021. Conawapa has an estimated in-service date of 2023, but it too must get regulatory approval. Conawapa will only proceed if a transmission line is constructed in Minnesota to carry power to U.S. markets.
The PUB expresses concerns about the sluggish US economy which may reduce the demand and price for hydro power, and the increasing output of shale gas which could also decrease future demand for hydro exports. According to the PUB, this situation may result in Manitoba Hydro ratepayers subsidising the price of hydro power exported to other jurisdictions and states that it may be prudent to defer construction of future projects until we have a clearer idea how these forces will evolve.
However, given existing export commitments already made with Wisconsin and Minnesota and the long-range planning required for new hydro infrastructure, it would be unwise to delay construction. Even if the global economy continues to stumble for the short term, over the medium term it will improve, leading to rising interest rates and a weaker Canadian dollar. Borrowing and construction costs would continue to churn during the time projects are put on hold and may eventually end up significantly higher. Moreover, any delay in our construction plans will result in US utilities seeking alternative suppliers, which could dry up opportunities for export sales in future.
The PUB acknowledges that shale gas extraction is controversial and that the shale gas ‘revolution’ may not unfold as anticipated. The impact of extraction on “the environment, energy, toxic hazards, worker safety, pollution and climate change” continue to proliferate and are likely to curtail, if not derail, the current shale-gas frenzy.
The Board acknowledges the vulnerability of southern Manitoba to outages caused by the failure of Bipole I and/or II and the need to address reliability. But then it justifies delays in construction because there is no guarantee that net export profits will be sufficient to cover the costs of the new transmission, leaving domestic customers to absorb costs through higher rate increases. But if Bi Pole I or II failed, the costs to ratepayers and/or taxpayers would be far greater than any rate increases. Exports and reliability are separate issues; one should not be made contingent on the other.
In spite of the preliminary nature of the PUB report, some pundits are brandishing it as proof that the government is forcing Hydro to make unwise business decisions. Nothing could be further from the truth. The report asks legitimate questions, and in doing so, the PUB fulfills its mandate to protect Manitobans’ investments. But its recommendation to halt construction on major projects—required to meet our contractual obligations with two U.S. states and to secure southern Manitoba’s power supply—should not be heeded. Two major export contracts and a plan to deliver energy security trump speculation about a volatile economy and questionable fracking technology.
We are puzzled as to why the PUB is seeking information that deals with plans for the next ten or fifteen years in order to make a determination on rate increases required to deal with current circumstances. The Board has committed to reassess its findings in a subsequent Order; we suggest that the reassessment focus on Manitoba’s present situation so that Manitoba Hydro can move forward with its long-term plans.
Errol Black is a CCPA Mb. board member and Lynne Fernandez is a CCPA Mb. research associate.
The CCPA-MB extends condolences to the family and friends of Jack Layton, federal leader of the NDP, who passed away early this morning.
Errol Black, chair of the CCPA-MB Board, remembers Jack Layton.
I first met Jack Layton in London, Ontario, when he was the President of the Federation of Canadian Municipalities. I was impressed with him then, and was impressed with him as the leader of the NDP.
Jack was a person who got people excited about progressive politics. He was exuberant and positive and at the same time, he was approachable and open to new ideas. A lot of people in Brandon and in Manitoba supported him. Jack had a voice in North America that was very different, and that brought a new energy to political debate.
Under his leadership, the NDP achieved a big caucus, a diverse caucus, with lots of women, lots of representation from Québec, as well as lots of depth and a large number of people who will be good leaders in the future. Jack leaves the NDP in good shape, and it will continue to be a strong and effective opposition, committed to social democratic values and progressive alternatives.
You can read the CCPA national office’s statement here.
A couple of days ago, Jack Layton wrote a letter to all Canadians. You can read his letter here.
In today’s Fast Facts about the march of inequality making its way throughout the world, Errol Black and Jim Silver use a term I like very much: the INEQUALITY AGENDA. This agenda – to ensure that wealth continues streaming up to an increasingly bloated privileged class – is being pushed by the Harper government and like-minded administrations around the world.
I’m glad that progressives are using hard-hitting, pithy terms like this. These two simple words capture the spirit (agenda) and devastating consequence (inequality) of free-market fundamentalism .
We see the results of income inequality in Canada, with the well-documented growing gap and attendant increases in societal problems. We see the deviousness of the agenda’s design in the “solution” to the US debt-ceiling problem (their solution will exacerbate the problems faced by every-day people). Indeed the very fact that the world’s economic problems are blamed on too much debt is in itself testimony to the ability of the inequality agenda to appropriate a situation, revise it to suit its purposes and then convince a “largely complacent majority” of the public to believe utter nonsense.
The extreme Right has been very effective at this sort of revisionist economics and part of the reason is because they’ve captured terms like “tax burden” and “entitlements” that resonant with the public. We need to use terms like the “inequality agenda” until they become as much of the public discourse as “tax burden”. I recommend that you take a moment to read about the inequality agenda as presented by Black and Silver. And spread the words: Inequality Agenda.
Lynne Fernandez
In June, 1998, Toronto’s Centre for Social Justice published a report by Armine Yalnizyan on the dimensions and implications of growing inequalities in the distribution of incomes in Canada.
In November, 2006, the Canadian Centre for Policy Alternatives (CCPA) established the Growing Gap project to track income trends “and policies that help or worsen the problem of income inequality in Canada.” Since 2006, CCPA has published many studies documenting the persistent growth in inequality, and the government policies that promote it.
There is now a considerable literature, both global and national, confirming the damage done by economic inequality. The evidence is overwhelming. Poor educational outcomes, adverse effects on health, economic dysfunction—all these are a product, in part, of the rise in recent decades of income inequality.
Yet in the May, 2011 federal election the Conservative Party campaigned successfully on a platform that included measures that will increase inequality, including cuts to both corporate taxes, from 18% to 15% by 2012-13, and government spending. Despite evidence that these measures will adversely affect the economy and most Canadians, the proposals and the party were endorsed by most major newspapers save the Toronto Star, which was also the one newspaper that raised the inequality issue during the campaign.
The Conservative government is now pushing ahead with this inequality agenda. The Globe and Mail reported on June 11 that Jim Flaherty intends to “make Canada’s income-tax system flatter by reducing the number of tax brackets – in order to give people more incentive to work.” There is no solid evidence that a flatter tax structure will strengthen the economy and enhance Canadians’ welfare. Indeed, there is some recent evidence suggesting that current compensation packages for corporate CEOs and associated taxation arrangements create perverse incentives that divert resources from long-term investments, to activities that raise share values and enrich senior corporate management.
Many economists argue that the inequality that already exists in Canada, the U.S. and U.K. serves as a drag on economic growth, job creation and rising incomes, which in turn leads to stagnation and slump. For example, in a recent article titled “Inequality and the Great Recession”, Barry Clark argues that the economic collapse of 2008 “has seriously discredited free market fundamentalism”, and that “support for redistribution will grow” as people begin to understand the economic effects of ever-rising inequality. He concludes that to overcome current problems we need to create conditions that will raise wages and reduce inequalities.
Yet the recent “solution” to the debt ceiling problem in the U.S.A is a stunning and irresponsible fiscal package that does the exact opposite, and that will magnify that country’s already massive inequalities. This outcome is the product of a climate of ideas —shared by Canada’s federal Conservative government—that diverges ever further from the real world, and from the clear evidence that we need to reduce, not widen, economic inequalities if our multiple economic and social problems are to be solved.
A big part of the problem is that governments have become, even more than ever before, the captives of big business, promoting policies that pump up the wealth and incomes of big corporations and the rich. These arrangements are then discussed — as if they were reasonable and benefitted the entire population rather than just big business— by the large corporations that comprise the print and electronic media.
Even in those rare cases when the corporate media identify the problem, they draw inaccurate and limpid conclusions that leave people thinking nothing can be done. This is exemplified by a July 20, 2011 article in The Globe and Mail in which Jeffrey Simpson poses the question: “Do we care that Canada is an unequal society?” Simpson presents data from a Conference Board of Canada study showing that from 1980 to 2005, earnings of the top 20 per cent in the income distribution “rose by 16.4 percent while middle-income Canadians’ incomes stagnated, and earnings for those in the bottom group slid.” He also cites some of the evidence showing that over the last 30 years policy changes have contributed to a growth in inequality – a trend that will be much accentuated under a Harper government. In answer to his question Simpson notes that: “Committees of both the House of Commons and Senate have issued reports on poverty: neither stirred much interest. Income inequalities are apparently not deemed important subjects in this self-centered age.”
Simpson’s answer is wrong. Most Canadians do care. This was confirmed in a CCPA survey of Canadian attitudes toward income inequality published November 20, 2006, and has since been elaborated in important work done by the CCPA’s Trish Hennessey. It is the people who have the power in this country who don’t care. They like the new status quo, and so will continue to promote ideas that—in defiance of the evidence about their damaging effects—produce ever-growing inequalities of income.
These political and economic ideas, previously known to be the work of a wacky fringe element, are now taken seriously and are being implemented aggressively by the corporate-funded and media-supported far Right in Canada and the U.S.A alike. The self-interest of the powerful few has pushed aside reason; their political forces have run roughshod over those who would build a more egalitarian and socially just society; their policies will drive us even more rapidly toward economic crisis—and this is without making mention of their equally reckless refusal to deal with climate change.
Pernicious and self-interested ideas promoted by the powerful and fanatical few on one side; equality and social justice supported passively by a largely complacent majority on the other. This is a recipe for ever greater inequality, and all the problems that go with it. The only thing that will change this situation is ongoing demonstrations of outrage by Canadians who care about the future of this country. This needs to start now.
Errol Black and Jim Silver are CCPA Mb. board members.
by Jonathan Hildebrand
Does social mixing as public policy result in more equitable cities, more culturally diverse neighbourhoods, and less social marginalization? These are some of the goals to which social mixing policies have aspired, but they have often fallen drastically short.
In some cases, social mixing policies have even been shown to impede equality and encourage further urban ghettoization. While a more socially just and equitable city is worth working towards, some of the means by which policymakers, planners, and activists have attempted to get there – in this case social mixing policies – deserve close scrutiny.
For example, the US Department of Housing and Urban Development’s “HOPE VI” program, initiated in 1992, aims to introduce social mix in cities by dispersing lower income households across larger geographic areas and into wealthier neighbourhoods, through the demolition or rehabilitation of public housing projects into mixed-use and mixed-income developments. Although the redevelopments usually include some public housing units, most units are converted to market rate rents, meaning that public housing families are involuntarily displaced, and forced to find housing elsewhere. While they can be given subsidies to relocate, this involuntary dispersal doesn’t necessarily result in bringing people of diverse incomes into closer proximity: displaced households often simply move to other neighbourhoods of concentrated poverty, and often report less positive experiences in their new communities (Goetz 2003).
While dispersal programs seek to decentralize and scatter lower income households into more affluent areas, mixed-income development programs aim to bring higher-income groups into economically disadvantaged areas. Proponents of this approach argue that a mixing of incomes in one location ensures that any public housing will fit more seamlessly into that community and will not be viewed as a centre of poverty within an affluent neighbourhood. They also hold that low-income households will benefit from the inclusion of more affluent households, despite the fact that these developments often result in people from diverse income brackets merely living in proximity without much actual social interaction (Goetz 2003).
Another criticism of social mixing initiatives in low-income areas is that they risk pathologizing poorer populations, eventually displacing them altogether. This was demonstrated in a 2008 study by Martine August on Toronto’s Regent Park Revitalization Plan. That particular Plan purported that “Behavioural patterns of lower-income tenants will be altered by interaction with higher income neighbours. For example, social norms about workforce participation will be passed on to lower income residents” (Regent Park Collaborative Team 2002, quoted in August 2008). Such language evokes the overt paternalism of nineteenth-century urban moral reformers more than it does notions of social equality and economic justice.
August’s study also points out that many social mix initiatives, while seemingly motivated by equality and social harmony, are actually more driven by neoliberal economic factors. These factors – attracting capital investment and become competitive, while developing an image of the city as an safe, exciting, innovative, and livable place – often result in social mix policies that displace and exclude certain people in order to “achieve a desired social composition” (August 2008).
Are there any models that come closer to achieving social mix without the baggage of paternalism, gentrification, or elitism? Swedish social mix policies contain some stark differences from other North American and European strategies, particularly in their more general scope directed across all urban neighbourhoods, rather than on specific areas or groups of people. One implication of this wider scope in Sweden is that social mix is to be implemented through normal planning activities as opposed to specialized housing programs. With this focus on building a diverse housing stock for all people in all areas of the city, Swedish social mix policy can be seen as “enabling social mixing in all parts of the city, rather than directly creating it through relocating or directing households to other neighbourhoods” (Holmqvist & Bergsten 2009).
Additionally, unlike policies that have in the past sought to counter the segregation of certain ethnic groups, the Swedish policy is to address socioeconomic segregation, not ethnic segregation specifically. The belief here is that, if socioeconomic segregation is targeted first, then an ethnic mix will follow, since, as one Swedish study pointed out, ethnic segregation of immigrants is rooted largely in their socioeconomic position (Holmqvist & Bergsten 2009). Although this example from Sweden might seem to avoid some of the pitfalls noted in other contexts, it is not without some unfortunate complications. Most notably, social mix goals in that country have sometimes been used to justify the denial of housing for minority groups in ethnically concentrated neighbourhoods (Bolt 2010) – a problem that once again brings up the issues of paternalism present in the social mix policies discussed earlier.
The rhetoric of social mixing seems to indicate a tempting way for policymakers and planners to help foster more equitable and diverse neighbourhoods without displacing people or diminishing affordable housing options. The track record of social mix policies discussed above shows that this might not be the case. Cities are facing issues such as the social and economic discrepancies between inner cities and suburbs, the loss of affordable rental units through gentrification and condominium conversions (under the guise of ‘rehabilitating’ inner cities), and the social and geographic displacement resulting from gentrification. Social mix policies might be a way of addressing these issues, but if cities wish to initiate such policies as a way toward social and economic justice, they should first ask whom might such policies favour, and whom might they ignore?
Jonathan Hildebrand is a graduate student in the City Planning program at the University of Manitoba.
On July 20th, CCPA- BC economist Iglika Ivanova posted her analysis of Statistics Canada data showing a breakdown of incomes in Canada and B.C on the BC blog, Policy Note
We were inspired to examine how the distribution of incomes looks in Manitoba using the same data from Statistics Canada Cansim Table 202-0401. The following table includes all income before-tax (including all government transfers, such as EI, welfare, GST credits) for economic families of 2 and more persons.
Income by Quintile – Canada and Manitoba
|
Canada |
Income Range |
Percent of Families |
Description |
|
Quintile 1 |
Up to $40,000 |
21.1% |
Poor and near poor |
|
Quintile 2 |
$40,000 – $60, 000 |
17.9% |
Lower-middle or modest income |
|
Quintile 3 |
$60,000-$85,000 |
20.4% |
Middle income |
|
Quintile 4 |
$85,000 – $125,000 |
21.4% |
Upper-middle income |
|
Quintile 5 |
Over $125,000 |
19.2% |
High income |
|
Manitoba |
|
|
|
|
Quintile 1 |
Up to $40,000 |
19.8% |
Poor and near poor |
|
Quintile 2 |
$40,000 – $60, 000 |
17.9% |
Lower-middle or modest income |
|
Quintile 3 |
$60,000-$85,000 |
23.7% |
Middle income |
|
Quintile 4 |
$85,000 – $125,000 |
21.5% |
Upper-middle income |
|
Quintile 5 |
Over $125,000 |
17% |
High income |
What does this tell us about Manitobans?
Fully 19.8 percent of Manitoba families of two or more persons are earning less than $40,000, and depending on their family size, are living near the poverty line. 37.7 percent of families are earning less than what would be considered a middle-income. Only 23.7 percent of Manitobans are in fact middle-income earners with the remaining 38.5% of earners in the upper-middle to high-income quintiles. Bottom line? the middle class is not the norm.
If you are a family of two or more with less than $60,000 income before-tax, you are earning less than middle-income. As described by Ivanova, many of the existing and proposed federal government tax cuts benefit those with incomes exceeding $70,000. Add to this the Conservative government’s disinterest in policy measures that will help low and middle income families, such as childcare and adequate pensions, and we will likely see a further increase in disparity between low and high income earners.
On July 12, 2011 long-time CCPA supporter and current board member Kathy Mallett was invested into the Order of Manitoba. In addition to being on the CCPA-Manitoba board of directors, Kathy is the co-director of the Community Education Development Association, and has worked in the Winnipeg Aboriginal community for over 25 years. As a well respected community leader, she is most committed to social and economic justice for Aboriginal people, and has worked in the area of transformative justice, Aboriginal women’s development, and has donated countless volunteer hours to Winnipeg non-profits.
Kathy was also elected in the early 1990s as school trustee for the Winnipeg School Division #1 where she served a three-year term.
In addition to spending her time with the CCPA and CED organizations, Kathy is the mother of two grown women and is the grandmother to three boys and one girl.
The Order of Manitoba is intended to honour Manitoba residents who have demonstrated a high level of individual excellence and achievement in any field, “benefiting in an outstanding manner the social, cultural or economic well being of Manitoba and its residents,” and is the highest honour recognized by the Manitoba Crown.
CCPA Manitoba is honoured that Kathy’s shares her compassion and commitment for social justice with us through her role as a board member.
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