Taxes, Pensions and Health care

More than half of Canadians do not have money saved up for a rainy day according to the Royal Bank (RBC).  What is rainy day money?  Since I was a kid people told me you had to have at least three months salary in the bank in case of an emergency.  You know, things like your car's transmission going clunk, losing your job, your roof leaking beyond the ability for a patch, your rental gets converted to condo and you need two months rent to move, getting sick, or someone you know is sick in hospital across the country.

Those were the things you had to plan for in the past.  Today its worse.  We have been eating into our saving due to the tough times.  Wages are not rising, the US isn't buying, and Canadian manufacturing companies have been laying people off.  The federal government is in the process of laying off thousands of workers, all of which will mean a loss of spending by these laid off workers, affecting many small businesses especially in small communities.

Canadians are not saving for retirement either. In fact if you look at who has money in RRSP's its not working people.  Eighty percent of stocks and bonds held in Canada are held by ten percent of the population.  That same ten percent hold fifty percent of RRSP contributions.  That means the bottom ninety percent of Canadians hold the other half of RRSP contributions.  Without saving their retirement will be very sketchy.  That will lead to more problems for the Government as our population ages and they can't afford to look after themselves.

Solutions have been made to address this growing problem.  One that comes up regularly is doubling CPP contributions over the next few years.  The NDP have been calling for this initiative for several years now. If enacted we would see a huge decrease in poverty for those that are retiring.  CPP contribution increases would address the issue of a lack of savings for retirement.  It would still be advisable for people to save what they can, still poverty would be avoided.

The proposed CPP increase has been the target of groups representing small business and the Federal Conservative government.  They see it as an unfair burden on business.  It will add costs to business and workers but isn't it worth it in the end if most Canadians can have a decent retirement? Wouldn't it help alleviate some government expenditures in the future? Of course it would.

Over the last thirty years we have seen an effort by Conservative and Liberal governments bent on lowering taxes.  The philosophy suggests that government doesn't need the money and you can do better on your own. The result of this policy is that government then lacks the resources needed to provide vital services.  We see cuts to education, health care and other social programs.

As governments cut taxes they usually cut programs.  Then they point out in the new budget, social program spending now amounts to a higher percentage of the budget. This has happened to health care spending for at least twenty years.  The provinces point to health care spending taking forty-six percent of the budget, when it was forty percent a few years earlier.  What you and I don't get told is that the Federal government use to pay fifty percent of health costs.  Today that number is closer to sixteen percent.  Provinces then have to use more of their revenue for health care.  That means cutting other government programs and or cutting health care services.

In the end we are told that the system is too expensive, we close operating rooms, we privatize seniors homes, we pass more costs back to seniors paying to be cared for in these homes.  We reduce or don't enforce health and safety standards. Seniors are left to fend for themselves. Hopefully they have family or a friend to help.

We are told that the private sector could do a better job. While closing operating rooms in public hospitals or limiting their use, the private sector sets up assembly line care, ie clinics that do nothing but hip or cataract surgery.  They roll them through one after another. Usually these surgeries are routine, not difficult.  That leaves the more costly surgery for the public system, so the overall average of the cost of operations per surgery goes up and gets compared to a private facility.  The private sector is better they say.

The reason governments are looking to private services is that we don't fund our hospitals to do the surgeries, we don't calculate the after cost which should be borne by the private facility but is most usually borne by the public system.

In the end we are squeezing health care to allow government to cut taxes. The government then does not have the ability to address these needs. Cut back more we're told. Privatize we're told. All studies continue to show as a percentage of our GDP Health care costs are manageable. We just have a different set of priorities.  Priorities that focus on cutting taxes for business.  As we continue to do this, business is sitting on hundreds of billions of dollars in cash.  They're not reinvesting their tax savings.

The reason people are told we must cut taxes is to be competitive, to encourage business to reinvest. If you look to Canadian taxes today or over the last twenty years, we are lower than our competitors by a wide margin. Businesses are not reinvesting.  So what is it we are getting for these tax cuts.  Were seeing the gap between the wealthy and working Canadians grow extraordinarily.  Canadians do not have the funds to save for retirement nor do they have the money to fix their car if it breaks down. Our middle class is being squeezed.

If you want to know why Occupy movement is growing, I have outlined above part of the reason. People are not confident, people are doing with less while a small percentage reap the benefits of our governments economic policies.  Public health care is constantly under threat. Public services are reduced. Cities in Canada need 123 billion dollars to address ageing infrastructure.  Roads, sewers, transit, schools all need major retrofits or replacement. Disposing of garbage becomes an ever increasing burden, yet our cities are unable to get the funds to deal with them. We deal with things largely on an urgency basis.    

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