From The Advocate, March 2012
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Unraveling the social contract
By Gerry Edwards
President, BC FORUM
Published March, 2012 - There’s never a good time for it, but Harper’s vow to make changes to Canada’s inadequate public pensions comes at a particularly bad time. Retired workers, and workers close to retirement, are already being squeezed by risky markets, low interest rates on savings, stagnant incomes, and the rising cost of everyday household expenses.
Even those who planned ahead are suffering as their guaranteed investment certificates pay less than inflation, cutting into the value of their savings year after year after year.
“Savers are screwed,” says Nick Rowe, an economist and monetary policy expert at Carleton University.
One of those savers – Colleen Wallace, 70 – starkly describes the dilemma faced by today’s retired workers: “I’ve decided I’ll live until 80. But God, if I hang in until 90, then what?”
There are many reasons why many Canadians are already pessimistic about their economic circumstances, and Harper’s surprise attack on the poorest and most vulnerable seniors can only make it worse.
Household debt has hit a record high of 153 percent in relation to disposable income – worse than the debt burden in the US and the United Kingdom.
The income gap between rich and poor is growing wider. A December 2011 report by the Organization for Economic Co-operation and Development says this is largely due to government cuts in support programs for lower income Canadians, and cuts in tax rates for the rich.
“The social contract is starting to unravel in many countries,” warned OECD Secretary General Angel Gurría.
Canada’s top 100 CEOs were paid an average of $8.4 million in 2010, up 27 percent from 2009. By comparison, the average wage-earner grossed just over $44,000, a 1.1 percent increase that failed to even keep up with inflation.
It’s worth remembering that the Harper government, when elected in 2006, inherited a $13 billion surplus. Thanks to a continuing series of tax giveaways to corporations and the wealthy, the government now has a $30 billion deficit.
The growing deficit hasn’t discouraged the government from its plans to purchase F-35 fighter planes at an estimated cost of $30 billion. Nor has it delayed the government’s “tough on crime” agenda – $19 billion for new prisons while crime rates are at their lowest in 40 years.
Surely some of the elite could be asked to pay a fair share of taxes. And surely public pensions are at least as important as prisons and fighter jets.