Business Summit proposals no help for BC: CCPA opposes call for tax cuts

The Report: January 1999 vol.19 num.5

The BC Business Summit has not delivered on its promise of new ideasfor reviving the BC economy, according to the Canadian Centre for Policy Alternatives.

-All we have heard is a repeat of the same old ideas the businesslobby has been pushing for decades: lower taxes, cut regulations, privatize services, andrepeal labour and environmental legislation," said Seth Klein, the Centres BCDirector. -These policy prescriptions may improve the profitability of some BCcorporations in the short term, but they are not in the long term best interest of mostBritish Columbians."

-The message from business groups is a contradictory one,"says Klein. -They want taxes cut and the budget balanced. But they cant have itboth ways. To deliver on the demand for tax cuts, the government would either have toincrease its budget deficit, or undertake significant cuts to important public programs.The promise of new teachers and nurses would be wiped out."

Privatization and contracting out ofpublic services
-The call for aggressive contracting out of services come as a surprise," saysDavid Fairey, a labour economist with the Trade Union Research Bureau, who was a delegateto the BC Business Summit. -Contracting out was not a discussion topic at the Summit,and was certainly not one of the six priority areas highlighted by the delegates."

Contracting out, in many cases, does not save the government money; itmerely transfers public money to private operators. Recent efforts to contract out garbagecollection by many GVRD municipalities have not proven cost effective.

-Contracting has been tried in BC for hospital food services andhouse-keeping," says Marcy Cohen, a researcher with the Hospital Employees Union anda research associate with the CCPA. -In both cases, quality declined and costsincreased, so hospital management ended up bringing those services back in house."

Governments tend to underestimate the costs of privatization, and thepublic loses accountability.

Labour legislation
Statistical evidence does not support the notion that BCs labour laws are biased infavour of workers and unions. The BC government brought in a new Labour Relations Code inlate 1992, and business groups claimed then the changes shifted too much power to unions.However, since 1992, unionization rates are down (from 36.3 per cent in 1992 to 32.3 percent in 1997), union certifications are down, work stoppages are down, and negotiated wageincreases are down.

One government policy that has been a drag on growth over the pastcouple of years was the decision to scale back capital spending from about $2 billion tounder $1 billion per year. In an effort to balance the budget, the government cutinfrastructure spending, thereby lowering the growth rate by approximately one per cent.

-Its good news that the government is now restoringinfrastructure spending," says Klein. -There is clearly a need for a fiscalstimulus to improve the economy. But that stimulus should take the form of increasedspending on infrastructure (schools, social housing, roads and public transit), educationand research, health and social services ... not tax cuts."

-The real point of the Business Summit was to hijack the publicpolicy agenda," says Klein. -The government needs to hear from all BritishColumbians, and should not be swayed by one special interest group."

Source: Excerpted from CCPA news