Why spending cuts and privatization are NOT the answer for BC

March 22, 2000

Business interests in BC are lobbying hard for tax cuts for corporations and wealthy individuals. These kinds of tax cuts are regressive, because they would primarily benefit those at the top of the income ladder--those who need a break the least. Tax cuts would also reduce the revenue needed by governments to fund the public programs and services most of us depend on.

The BC Business Summit proposes to pay for their desired tax cuts by cutting government spending by $1 billion. While it may have been poured into shiny new , this budget-cutting agenda is really an old and sour wine. Beginning with the likes of Margaret Thatcher and Ronald Reagan, the push to undermine governments' ability to act in the public interest has never been stronger.

The crucial question that needs to be asked of these kinds of proposals is this: what impact would they have on the people and communities of this province?

A thoughtful response to this question requires two things. First, we need to take a look at the current state of the public sector in BC. Next, we need to examine the evidence about the effects of government downsizing here and elsewhere, and ask ourselves if these are the kinds of outcomes we want for ourselves, our families, and the communities we live in.

Contrary to popular perception, BC has not been spared the severe downsizing we've seen in Klein's Alberta and Harris' Ontario. In fact, under the Social Credit "restraint" program of the early 1980s, BC was a North American leader in downsizing the public sector. Employment was slashed in all ministries, budgets for public schools, universities, and colleges were cut, and many preventative health and social service initiatives were axed. Even the provincial Human Rights Commission was abolished. In return, British Columbians got a slowdown in economic growth, lower real wages, and more inequality.

What about the present situation? On a per person after inflation basis, provincial government spending continued to fall throughout the 1990s--by $544 from 1991 to 1998. These cuts have been felt particularly hard in areas outside health and education--social assistance, grants to municipalities, services for children at risk, and environmental protection are some of the places where underfunding is especially visible. Even the recent increases in health and education spending have not kept pace with inflation and population growth. Per pupil operating spending in the province's public schools is down by almost $300, and we are well aware of the strains in public health care. BC also has fewer public sector employees per capita than all provinces but Ontario.

Our public sector is already showing signs of stress due to lack of funds. What would happen with further cutbacks? The evidence is overwhelming that public sector downsizing is costly--especially for those who are already the most disadvantaged and vulnerable. Cuts cost jobs in both the public and private sectors, lower the quality of service, reduce access to needed services, and increase private out-of-pocket expenses.

Budget cuts also increase the pressure for privatization, whether it's selling off crown corporations or contracting with private companies. Here, too, the balance of evidence points to poorer service, loss of jobs and money from local communities, higher user fees and, very often, higher costs to governments.

We need to be very clear about who stands to gain and who stands to loose from this latest attack on the public sector and public services in BC. The evidence is clear: if British Columbia continues to travel down a road marked by budget cuts and privatization, the families and communities of this province can expect to find themselves with more poverty and inequality, less access to needed goods and services, and less say in the decisions that affect their lives.

There is a great need for an open and informed discussion of public policy options in this province. Here is one idea to get things started. In order to ensure that the public interest is protected, the provincial government could set up a Review Board for Privatization and Contracting Out that would evaluate all proposals on a broad range of democratically-determined criteria before they were allowed to proceed.