The Alberta Federation of Labour appreciates the opportunity to present its views on the current fiscal and budgetary direction of the federal government. The Federation represents approximately 115,000 unionized Alberta workers and their families. Our members work in every economic sector and geographic region of the province. As well, the federation has historically tried to represent the interests of unorganized workers, particularly in areas effecting work.

This is an opportune time for us to engage in this kind of consultative process because we have just completed a very similar exercise provincially. The Federation just sponsored a conference called 'Investing in Tomorrow' that centred around a broad discussion of the role of government in the economy.

The conference was stimulated by the Alberta government's public consultation about post-deficit government programmes and policies. The provincial government is currently running its fourth consecutive multi-billion dollar surplus, and is scheduled to be net debt free by the turn of the century.

Surprisingly, both the government's hand-picked summit and our conference delegates came to similar conclusions — all of which are germane to the federal government's budget process.

The majority consensus was that citizens do not want tax cuts. Rather, they asked for a more active government.

This broad social consensus has been misinterpreted by its opponents simply as an irresponsible call for more public spending. However, that is a completely inaccurate representation of events.

First, this is not a debate between reducing debt and deficit versus irresponsible and frivolous spending. That majority who advocated expansion of government made it clear that reduction of public debt and deficit must remain as a priority of government.

However, there was a very high priority placed on restoration of health care, social assistance, and education funding. Albertans are very conscious of the deterioration of these key public programs. For instance, there are now half the number of hospital beds open in Alberta that there were in 1991. Waiting lists and wait times for surgery have continued to lengthen.

University and technical school and college tuition fee increases are putting advanced education beyond the reach of many Alberta families. Social assistance payments have been cut back to punitive levels, and thousands cut off by increasingly stringent conditions. (3400 last year — only one restored on appeal, one through court). Food banks continue to be hard pressed despite improving employment numbers.

Certainly, provincial government fiscal policies play a large role in the reduction of core public services in Alberta. But declining federal transfer payments for health, education and social welfare are also partly responsible.

The Role of Government

Beyond a straightforward request for restoration of core services, the next most dominant consensus was the need for government to fulfil its mandate to govern. Our members want increased government regulation of the workplace, of the environment, and of the marketplace. They felt governments at all levels had been reneging upon their responsibilities to regulate and to enforce regulations that protect the public good.

The deregulated transportation industry, for example, has been a nightmare. Workers have lost their jobs, wages have not kept up to inflation, workloads have increased, public safety has been compromised, and predatory competition has left too many carriers in financial straits. The hidden public subsidy of the trucking industry has ironically transferred work from the railroads to the more heavily polluting and more inefficient trucking industry.

To properly fulfil its regulatory responsibilities, we feel that government has to invest more money in regulation by hiring more regulators (eg. meat inspectors, customs inspectors), instead of continuing to lay them off.

There are many areas where government policies and initiatives are best delivered through the public service — generally in those areas where public and private interests do not easily mesh.

Research and development is one of those areas. In the past four years, there have been significant layoffs in the research activities of the federal government. The research component of the Canadian Forest Service provides one such example. But no serious silvaculture researcher would suggest that all of the valuable work carried out by CFS over the years would have been accomplished by simply providing money to forestry companies for research. The private sector will only fund research directly related to immediate profitability — and that just isn't adequate to protect the public interest. The same holds true in many other areas where federal research is conducted (eg. drug testing, agricultural and food product research).

Job Creation and Wages

There is a vocal minority in Canada that is calling for tax cuts now that the federal government has nearly got its deficit under control. Not surprisingly, most of these voices come from the extreme right of the political spectrum, and are ardent free marketers who see no real role for government at all.

One of the strangest arguments in favour of tax cuts was recently voiced by the ex-federal Finance Minister Don Mazankowski. He claimed that the average working person didn't have enough money, and that the best way to put some money on workers pockets was through tax cuts.

What incredible nonsense. First, tax cuts uniformly benefit higher income earners more than lower income earners. But, more importantly, the best way to put more money in a workers' pocket is to give them a pay increase.

And the best way to get workers a pay increase is to create the economic conditions in which workers' bargaining power is increased. That means encouraging job creation so that the unemployment level drops and stops acting as a barrier to wage demands in the labour market.

Of course, both the previous conservative and current liberal federal governments are committed to maintaining unemployment above 8% — the so-called Non-Accelerating Inflation Rate of Unemployment. This despite the fact that American policy makers are dismissing the whole NAIRU theory, and that recent American economic conditions contradict the whole basis of the theory.

Moreover, proponents of the theory never take into account the real costs of unemployment in terms of lost productivity, lost taxes, and pressure on social assistance.

The fact is that the federal government can create valuable public sector jobs and consequently influence the entire labour market by restoring funding to core public services and by expanding its regulatory role. Simply restoring funding, however, is not enough. The method of funding also needs to be addressed. Canada needs a return to clearly identified cash tranfers rather than the current trend toward financing through tax points. Only through an expanded federal fiscal presence in our major public services will there be a strong basis for creating and enforcing national standards in education, health care and social welfare programs.

Further, a simple commitment to maintaining a low-interest rate will stimulate employment, ultimately, raise wages and increase consumer spending far better than any tax cut would.

Conclusion

The Alberta Federation of Labour would like to see a federal budget that aims squarely at job creation through expanded funding of core public services, of government regulation, and of government enterprise and research. This is not a 'spending' request. It is a suggestion to 'invest' public money in programs that benefit Canadians now and in the future.

Further, an explicit abandonment of the NAIRU directed policy of maintaining high unemployment through high interest rates would create an economy where job creation and legitimate wage increases occur naturally.

Finally, tax cuts should not even be considered. Such cuts do not benefit working people enough to compensate for the decline in public services they have already endured. Any new tax initiatives should be directed at ensuring that the extremely wealthy and the corporate sector are paying a fair share of Canada's tax burden. Contrary to popular mythology, we are not overtaxed in comparison to most economically advanced nations. In fact, our corporate sector is decidedly undertaxed by OECD standards.

More tax revenue from the upper end of our economic strata could allow the government to both reduce its debt and invest in new and improved government activities.