News
1. Government debt
“Halifax councillors tackled cuts to the city’s capital budget on Thursday, adding and subtracting from a list of more than $100 million in projects that won’t be completed in 2020,” reported Zane Woodford yesterday.
Woodford lays out the cuts: the Cogswell Interchange redevelopment project axed by $26.3 million, new bike projects cut by $3.4 million, the Spring Garden Road makeover by $7.5 million, among other cuts.
And these cuts to “capital” projects — basically construction, reconstruction, and purchasing new products — come atop $85 million in cuts to operating budgets and the layoff of 1,500 employees.
City councillors and the bureaucrats they supposedly control have their hands tied — by provincial law, municipalities in Nova Scotia can’t run budget deficits and can only incur debt under very prescribed circumstances (for capital projects, for example, but now also by borrowing from the province to cover delays in property tax revenues).
I fear that these municipal cuts are only the beginning. I don’t see any real end to the COVID crisis anytime soon — there won’t be a magical day in July when Dr. Strang gives us the all-clear and says we can all start touching our faces again and the next day the restaurants and bars are packed, just like they were in January.
Unless there’s massive government intervention, most restaurants and bars won’t be able to open on anything more than a very restricted basis until a vaccine is invented, which is likely years into the future (and it’s possible that one will never be invented), leading to most restaurants and bars going out of business. So will a lot of other retail and service businesses. The immediate human suffering (lost jobs for employees, bankruptcy for owners) aside, that means a collapse in the commercial real estate market, which in turn leads to a big reduction in property tax revenue for the city, and then to lots more cuts.
Some of the city cuts don’t have an immediate effect on the economy. It’s not great that the parkland acquisition fund is being slashed, but it’s just another loss in the overall future degradation of our quality of life. No one is losing their job tomorrow because assembling the property for the Blue Mountain–Birch Cove Lakes Wilderness Park is delayed another few years.
But plenty of the other cuts do indeed have immediate economic impact. Cutting large street and highway projects like the Cogswell and Spring Garden Road redevelopments means lots of construction workers won’t be hired, and lots of contractors for everything from asphalt to surveying to landscaping won’t be bringing on staff to supply the city’s needs.
Yet, the city’s slice of responsibility for lost employment is tiny in the overall scheme of things. Private businesses are closing and curtailing operations all over the place, and there’s no end in sight. Even when things start opening up a bit, there won’t be a sudden surge of demand back to pre-pandemic norms. We’re in for an economic downturn for a very long time.
There’s no way to come out of this with any sense of wholeness without unprecedented government intervention. That means debt. A lot of debt.
We’re now seeing a dance between the provincial and federal governments about who’s going to take on which financial obligations. Arguably, because it controls fiscal policy (it sets interest rates, prints money, etc.) the federal government is better positioned to lead on major economic initiatives, but that doesn’t mean the province can’t also move — by, for example, backfilling municipal coffers. With grants, not loans.
The province will also necessarily have to get involved in rent and payroll subsidies, make work projects, and creative financing for homeowners. There’s been a tiny bit of this already, but Premier Stephen McNeil is moving incredibly cautiously; so far, it appears he intends to live within the existing, pre-pandemic budget. For example, the business rent deferral program — which has very little take-up because small business owners don’t want to take on more debt when they don’t know if they’ll even survive — was costed out at a miserly $5 million in defaults.
Through the years, McNeil has pegged his political fortune on being “fiscally conservative” in a sort of 1980s understanding of the term. He’s slashed expenses, cut taxes, taken on unions, all in the name of “balancing the budget,” and those balanced budgets are then made the cornerstone of the next political campaign.
There are other ways of understanding government’s role in the economy — maximum return to the capitalist class is an awful political aim. Such pennywise decisions have, for example, delayed the introduction of single-occupancy rooms at Northwood, and put health care workers in the position of holding down jobs at multiple job sites, both of which worsened the effect of the pandemic.
Regardless, the point is that McNeil’s understanding of his job has always been that he should streamline government and balance budgets. And now, for the sake of the future, that understanding must be thrown out the window.
As each day passes, every hesitation and lack of, yep, “bold” action undermines our future economic outcome. There won’t be any rebuilding of the economy if there’s no foundation to build on, and that foundation is now being undermined, washed away in a tsunami of terrible events.
It’s not McNeil’s fault that there’s a global pandemic that is crushing the world’s economies, but here we are. We’re not leaving anything useful to the next generation by balancing budgets if that means we’re not acting to shore up people’s lives in the process. Balanced government budgets are an affront to decency when the unemployment rate is skyrocketing and people are losing their homes and businesses.
The province must start ramping up spending far more than it has so far in response to the pandemic. We should be prepared to further indebt the province by billions of dollars through this crisis.
During the pandemic, and as we come out of it, whenever that is, going massively into debt is the proper role of government. It’s the moral thing to do.
Of course that debt should be targeted at helping everyday people survive, not at further enriching the already rich. And there will be better and worse ways of spending money. And the responsibilities of provincial and federal governments will have to be sorted out.
But right now McNeil needs to signal that his government is willing to take that debt on.
2. Masks
“Get used to wearing a mask. And make sure you wear it properly,” writes Philip Moscovitch, who goes on to give us the whys and hows of mask-wearing.
Click here to read “Mask up: the hows and whys of wearing a non-medical mask.”
Like Philip, I felt horribly self-conscious the first time I put on a mask. I don’t get out much, so I’m still not used to it.
But I’ve come around to wearing one when indoors in situations where I’m not sure I can keep the proper distancing from others. An article in The Atlantic — How Hong Kong Did It — has clinched it for me. Author Zeynep Tuffekci focuses mainly on how the revolutionary instincts of the resistance movement in Hong Kong have better prepared the people in the city-state for dealing with the pandemic, but along the way she gets to masks:
In response to the crisis, Hong Kongers spontaneously adopted near-universal masking on their own, defying the government’s ban on masks. When [Chief Executive of Hong Kong Carrie] Lam oscillated between not wearing a mask in public and wearing one but incorrectly, they blasted her online and mocked her incorrect mask wearing. In response to the mask shortage, the foot soldiers of the protest movement set up mask brigades — acquiring and distributing masks, especially to the poor and elderly, who may not be able to spend hours in lines.
…
Despite the Hong Kong government’s continuing ban on face masks, Hong Kong’s health authorities openly credited the near-universal mask wearing among the people for avoiding a surge in cases.
Hong Kong, a densely populated city with a population of seven million, has had just four deaths from the coronavirus.
Nova Scotia, with a population of less than a million, has had 58 deaths from the coronavirus.
Government
City
1pm: Special Budget Committee — Zane Woodford will be there (virtually), reporting for the Examiner.
Province
No meetings.
In the harbour
05:00: MOL Motivator, container ship, arrives at Fairview Cove from Norfolk
06:30: Oceanex Sanderling, ro-ro container, moves from anchorage to Pier 41
06:30: Nolhanava, ro-ro cargo, arrives at Fairview Cove from Saint-Pierre
13:00: IT Intrepid, cable layer, sails from Pier 9 for sea
13:00: Nolhanava sails for Saint-Pierre
18:00: IT Intrepid arrives back at Pier 9
20:00: MOL Motivator sails for Dubai
Footnotes
Another nice day.
Two cautions on the delayed acquisition of land for the long promised Blue Mountain Birch Cove lakes regional park
First, the land will continue to get more expensive to purchase.
Second and most important, the surrounding land owners are continuing to plan their developments with little or no provision for public access.
We are in real danger of a regional park that is walled off by private development while the very few unofficial access points are being overrun and destroyed by excessive and increasing use.
McNeil also needs to accept the fact that while we do need to devote a lot of time to deal with issues related to the pandemic, there are many other things that need the attention of the government of Nova Scotia – including the NDP and the Conservatives.
The first thing our taxes should STOP supporting is the freakin’ HALIFAX CONVENTION CENTRE… at the very least- if the residents of Nova Scotia are forced to have their taxes support this hulking shell-then it should be used to house the homeless, climate refugees, and the elderly who need private rooms to spare them from Covid-19 spread. These three things would make it just slightly acceptable.
If governments would just bite the bullet and make sure everyone gets a reasonable guaranteed basic income then they’d quickly find that people would spend that money. They would spend it locally on local goods and services. Those businesses would stay viable and pay taxes.
Government laying off employees and cancelling projects is, at best, a short term cost savings. If a laid off worker is forced to collect social assistance, the money still comes from taxes, only now the work the government worker did is not getting done. Spending tax money wisely means making sure people have reliable income, and a government job is a simple way to provide that, in exchange for public services. All those government employees can then spend their wages at private businesses.
Yes, government needs to increase debt, but governments at all levels can take on debt to an extent impossible for private businesses. The alternative is throwing people out of work, knowing there aren’t private sector jobs available.
Not too many years ago a government job meant a guarantee of earnings until the age 65 and then a pension. In exchange for the job guarantee and a pension, and a government employee was paid less than a private sector employee. Today an HRM full time employee receives a higher wage, a more generous and expensive pension as well as up to 6 months pay when she/he retires.
McNeil abolished the service award for teachers and provincial employees.
HRM just remains determined to tax residents and business to prop up an unsustainable wage and benefits programme, the belief in ‘let others eat cake’ is alive and well at city hall.
Bottom line : an HRM full time employee has no worry about layoff and is better compensated than a private sector employee who will almost always face the prospect of being laid off permanently and has no guaranteed retirement income other than CPP and OAS.
Our world is upside down.
Yes. The reality is that there is a privileged caste of Canadians who have lucrative government jobs who are almost impossible to fire. These people are in some sense, slaves, in the sense that they have to do anything the feds tell them to do or they will lose their sinecures. Ontario is a prime example, where more than 1 in 10 Ontarians work from the government, and therefore are a meaningful voting bloc that can vote themselves higher salaries.