1. 9th Forum for Association Presidents Austerity in Canada: Pain and No Gain! January 2015

2. Austerity in Canada: Pain and No Gain The Age of Austerity? Unpacking the money and the myths behind today’s bargaining climate Key points: 1.“Austerity” is part of a Conservatives fiscal policy“, not driven by need to balance budget, but by the goal to “Starve the Beast” (reduce size of government), and it is built into our electoral process 2.Austerity has a direct impact on all levels of governments and funding of PSE 3.It is a “political” first, not “economic”

3. Austerity in Canada: Pain and No Gain

4. “Starve the Beast” Vicious Circle

5. Austerity in Canada: Pain and No Gain “Starve the Beast” Cycle

6. Austerity in Canada: Pain and No Gain

7. “Starve the Beast” Cycle

8. Austerity in Canada: Pain and No Gain  The Starving the Federal Beast  Wave 1 (debt first)  1994-2001: Paul Martin (debt crisis, cuts to transfers and wage freeze!)  Wave 2 (tax cuts first)  2001-2006: Paul Martin (corporate tax cuts and program review)  Wave 3 (tax cuts first)  2007-2013: Jim Flaherty (cuts in GST and more government cuts)  Wave 4 (tax cuts first)  2014: Joe Oliver (income splitting...)  Starving the beast: Wave 2  2007-2013: Jim Flaherty

9. Austerity in Canada: Pain and No Gain  “Austerity” in Numbers: Governments are shrinking!  Government revenues to GDP:  Down in all provinces, except Man and Sask  Federal: 1993-94: 16.7%, 2013-14: 14.3%  Program expenses to GDP:  Down in all provinces, except Man and Sask  Federal: 1993-94: 16.5%, 2013-14: 13.3%  Transfers to PSE as a share of the economy are down 50% since 1992 (Fig 1.1 – CAUT Almanac)

10. Austerity in Canada: Pain and No Gain  Impact of “Starving the Beast” in Numbers:  Between 1992 and 2012, the proportion of university operating revenue provided by government sources declined from 77% to 55% while the proportion funded by student tuition fees has increased from 20% to 38%.  Between 1982 and 2012, total university expenditures increased by 205%, calculated in constant dollars. Over the same time period, total expenditures in real dollars on academic rank salaries at Canadian universities increased by only 103%. 

11. Austerity in Canada: Pain and No Gain  Impact of “Starving the Beast” in Numbers:  Despite the significant increase in university spending over the past 30 years, spending on academic salaries as a proportion of total university expenditures has declined steadily during this period. In 2012, spending on academic rank salaries represented only 20% of university expenditures, down from 30% in 1981.  CAUT Almanac…

12. Austerity in Canada: Pain and No Gain  “Starving the Beast” in Numbers: Do we really need more Austerity?  Number of jurisdictions running surpluses:  1993-94: 1, 2016-17f: 8  Level of Deficit:  Federal: 1993-94: $36.6b, 2013-14: $5.2b  Ontario: 1993-94: $10.1b, 2013-14: $10.5b  Deficit as a share of GDP:  Federal 1993-94: 5.2%, 2013-14: 0.3%  Net Debt to GDP:  Federal 1993-94: 65.7%, 2013-14: 32.3%

13. Austerity in Canada: Pain and No Gain

15. Austerity not for all!  About 1 out of 3 Canadian Universities were in Surplus in 2012-13.  Deficits are about $2k per student, and above $2k for only about 20 institutions.  Debt/FTE not always available, but influence Credit rating.  Credit rating observed are excellent.

16. Austerity in Canada: Pain and No Gain  Myth 1: We need austerity measures everywhere!  Answer: No! Not in most jurisdictions in Canada  And if we were collecting the same share of taxes as we used to not so long ago, we would all be better off!  Myth 2: After years of deficits, as Keynes insisted, the time for austerity is the boom not the bust.  Answer: When not big, deficits disappear as economy grows. Investing in PSE and research is a better way to reduce deficit and grow our economy for years to come. Cutting PSE would grow deficits in the future.  Myth 3: All PSE institutions are in trouble.  Answer: No! Only some institutions are suffering from previous rounds of cuts, especially from cuts in government transfers. More cuts will make more starving!

17. Austerity in Canada: Pain and No Gain Conclusion:  Deconstruct the message box around austerity;  Get out of the austerity vicious cycle! Link investments in PSE with benefits to society in general, from knowledge to democracy, with positive economic outcomes;  Don’t look back at how it was, but show how it could be (collegial governance, more job security = more research, etc…).