COVER/SPECIAL REPORT

HIGHLIGHTS FROM THE ACCORD ON THE DEFICIT

September 27 1993
COVER/SPECIAL REPORT

HIGHLIGHTS FROM THE ACCORD ON THE DEFICIT

September 27 1993

HIGHLIGHTS FROM THE ACCORD ON THE DEFICIT

I

A summary of proposals to reduce Ottawa’s debt

Preamble

We are ordinary Canadians, brought together for the weekend of Aug. 20 to 22,1993, by Maclean’s and CTV to discuss the deficit situation in the federal economy. We are convinced that this deficit and the national debt, which is the accumulation of past deficits, is a major problem in our country. We believe that now is the time to act to reduce and, as soon as possible, eliminate the deficit and begin to pay back the nation’s debt.

We have spent the weekend studying what can be done to improve this situation. Finding solutions to the problem of the ever increasing annual deficit is, in our opinion, the responsibility of all Canadians. Each person living in this country has a role to play in averting a debt crisis. We realized that we could not draft a national budget in a weekend; nor could we reform a system in a few days that governments have been unable to control for years.

PROPOSALS TO SOLVE THE CRISIS

We propose to:

1. Make expenditure cuts.

2. Improve government process.

3. Initiate wealth creation strategies.

SPECIFIC PROPOSALS TO CUT EXPENDITURES

1. We recommend that the federal government pass deficit reduction legislation to reduce the deficit over a three-year period. Quarterly budget and cash-flow reports should be introduced.

2. In order to set a model for responsible government, we agree that double-dipping—receiving a pension from one government job while holding another— should be eliminated.

3. GOVERNMENT BUREAUCRACY SHOULD BE REDUCED.

Ottawa’s role should focus on establishing and enforcing national standards. Furthermore, the number of federal departments should be reduced in favor of provincial and local bodies.

4. THE HEALTH-CARE SYSTEM SHOULD BE REVIEWED.

a) A user fee ($5-$15) should be paid by patients for hospital emergency services. However, no service should be denied and the patient should receive a bill later.

b) Excessive laboratory tests and associated costs should be cut.

c) Patients should sign a register when they receive services and they should get notification of the cost to:

i) demonstrate the cost of medical services to the public;

ii) catch any abuse in the system.

d) There should be stronger control over what is eligible for coverage in governmentfunded drug prescription programs. The list of eligible drugs should be reduced.

e) The abuse of prescriptions should be averted by tracking their use.

f) There should be greater emphasis on community-based health care.

g) Chronic care patients should be concentrated in acute care facilities.

h) Measures must be introduced to detect and stop health-care fraud.

5. UNEMPLOYMENT INSURANCE BENEFITS

A) Reform

Benefits should be reduced for repeat users; reduced after an individual earns a certain annual income; and there should be graduated premiums on employers, reflecting their staff turnover rates—the more layoffs an employer makes, the higher the unemployment insurance premiums that employer would pay.

B) Control

i) Retraining and job search assistance should be widely available to unemployed people;

ii) The benefits should be reviewed where:

—Recipients decline a job available in their community at a comparable salary or job level.

—Recipients refuse to take any job where relocation help will be provided if necessary.

6. WELFARE BENEFITS

Anyone who can contribute to society must do so. If they do not contribute, they should not be supported on social assistance.

7. GST

The GST should be frozen at seven per cent and harmonized with any provincial sales tax to reduce administrative costs.

8. PERSONAL AND CORPORATE INCOME TAX

These tax rates should not increase for a threeyear period under the condition that the following expenditure cuts are implemented over three years:

A SUMMARY OF SUGGESTED CUTS

PROGRAM CURRENT BUDGET PROPOSED BUDGET ANNUAL SAVINGS

Old age security $20 billion $16.8 billion $3.2 billion

Unemployment $19.4 billion N/A N/A

insurance

Major transfers to $26.4 billion $24.8 billion $1.6 billion

other levels of gov’t

—Lower level of social services is acceptable.

—The National Health Act should be amended to allow user fees to maintain or upgrade provincial health-care services.

—Cuts will come from education, health, Canada Assistance Plan—at a rate of 30 per cent over three years.

—No reductions will be made in equalization payments, since they are enshrined in the Constitution.

CBC $1.1 billion $770 million $330 million

—The subsidy should be reduced by 30 per cent over three years.

—The CBC should be encouraged to increase efficiency and increase international marketing efforts.

Native programs $3.6 billion $3.2 billion $360 million

—Savings of 10 per cent are anticipated through the transfer of responsibility from government bureaucracy to native community.

Government operations $20.3 billion $18.3 billion $2.0 billion

—Reduce the expenditure by 10 per cent annually through targeting specific areas such as multicultural programs, government pensions, “unnecessary projects” and new government buildings including statues, museums etc.

Defence $11.3 billion $10.3 billion $1.0 billion

—Proposed savings are based on a one-third reduction of capital expenditure over three years.

Agriculture $2.4 billion $1.68 billion $720 million

—Subsidies to be reduced by 30 per cent over three years in conjunction with an equal reduction in civil service salaries at all levels.

Business $3.3 billion N/A N/A

—Review subsidies to business to ascertain whether or not they are creating jobs or just expenses.

Cut by 30 per cent if they are not creating jobs.

TOTAL ESTIMATED SAVINGS $9.5 BILLION**

**This amount includes potential annual cuts of more than $300 million following a proposed review of business subsidy programs.

GOVERNMENT SPENDING

In order to address the deficit crisis, we recommend the following:

Provincial trade barriers: While provincial trade barriers may be protecting jobs in the provinces, these barriers must be eliminated as part of the overall strategy of attacking the deficit.

Input to political decision-making. Plebiscites, called Citizen’s Questions, should be placed on the ballot at general elections. These questions should not be restricted to deficit issues.

Duplication: There must be strong steps taken to improve the efficiency and effectiveness of federal, provincial and municipal bodies. Where possible, we favor placing resources at the local level.

Accountability: We recommend that each government department have two budgets: capital and operating. This should improve accountability as overruns on operating will be more obvious.

WEALTH CREATION

In order to add to Canada’s wealth-creating abilities, we recommend that:

—UI payments must be tied to training.

—UI and welfare recipients should contribute to the community by volunteer work and other efforts.

—Educational opportunities and effectiveness must be improved through co-op education and part-time training.

—More value-added products should be produced.

—Productivity levels should increase.

—An environment that stimulates the private sector and foreign investment should be fostered.

—Entrepreneurship should be encouraged and supported—starting with small businesses.

—Canada should become more internationally competitive.

—Wage expectations must be reduced.

—Education must focus on basic skills and knowledge levels.

—Natural resources must be used effectively to respond to the needs of the time.