From Free Trade dream worid eto budget doom and gloom SL TRADE WATCH The government’s first free trade budget is nothing short of a food bank budget that will drive Canadians from the workplace to welfare, says the Canadian Labour Congress. “It’s an economic mugging that just wasn't necessary,” said CLC pres- ident Shirley Carr who took special note of the government's shift in direc- tion on unemployment insurance funding. “This is a cruel, brutal budget that will come to symbolize the free trade agreement with its tearing down of our society rather than the building up,” said the president of the two million member CLC. As Canada’s first free trade budget, she said, it was a bitter blow to work- ing people that could steal away their livelihood and their homes. Only last year, the finance depart- ment, in its efforts to persuade Cana- dians of the virtues of free trade, constructed a rosy future. Gross Domestic Product (GDP) would grow three per cent a year from 1989 to 1993; job creation would grow at 2.2 per cent (or 260,000 jobs). Free trade, said the finance depart- ment assessment, would add another 20,000 jobs per year, enhance growth, investment, consumer spending and personal income. Each Canadian would gain an extra $450 per under free trade. “The economic benefits from the free trade agreement will start to be realized shortly after the implementa- tion of the agreement on January 1, 1989,” said Michael Wilson. Now he has given Canadians a bud- get and an economic future which stands the free trade vision com- pletely on its head. This new world lowers expectations, creates fear and prepares Canadians for austerity. Wilson's finance department now predicts that employment creation will slow to only half the rate of labour force growth by 1990. This will create an additional 100,000 unemployed. Output growth will stall at 1.7 per cent, new business investment will fall drastically and aggregate income will actually decline. What does the McDougall report on U.I. and the deGrandpré report on free trade adjustment have in com- mon? e In the U.S., an employee must work a minimum of 20 weeks to qual- ify for U.I. The McDougall report calls for an increase in the amount of time Canadians must work to qualify, from 10-14 weeks to 14-20 weeks. e In the U.S., U.I. benefits are provided for up to a maximum of 26 weeks. McDougall wants to drop the minimum duration of benefits in Can- ada from 30 to 24 weeks. The maxi- mum duration of benefits would drop from 49 to 43.8 weeks. e The deGrandpré report proposes shifting the current manufacturers’ sales tax (there is no equivalent tax in the U.S.) directly to consumers. e The report also urges Canadian farmers and eventually all Canadian eno caucers to sell at U.S. prices to rocessors. e The deGrandpré report does not recommend any specific worker ad- m1) a PM yc ighee t e gels pai phos usin FRE, CANADAREE Trape = TRADE {NT INWNASigN= HUGOIEY 9S © More than 800 protesters wait behind police lines for the arrival of Brian Mulroney at the Vancouver Trade and Convention Centre on June 8. The assembly, organized by the Coalition Against Free Trade, was protesting the April 27 budget and the fallout of the U.S.-Canada trade deal. justment programs. Why? These would challenge U.S. countervail law, which views such programs as unfair subsidies! What happened to promises about social programs, regional develop- ment and culture? e¢ Unemployment Insurance The budget continues government’s punitive manipulation of the work- force that asks the poor and the unem- ployed to pay for their own retraining. The Wilson budget increases unem- ployment and cuts U.I. benefits at the same time. It eliminates the federal govern- ment’s contribution of U.I. which amounts to about $3 billion per year. From now on, the program will be paid out of employee and employer premiums only. The current premium rate of $1.95 per $100 of earnings jumps to $2.25 in 1990 and employer premiums continue to be 1.4 times the employee premiums. ¢ Family Allowance Will be taxed back for income earn- ers over $50,000. A one income family with two children, earning $55,000 will see it taxed away completely. This is hardly a wealthy Canadian family and it marks the end of univer- sality, the essential hallmark of our social programs. © Old Age Pensions A similar taxback scheme is planned here as well. © Provincial Transfers for Medicare aod? Higher preneation: e ‘Tories have again changed the formula reducing these transfers by $200 million next year and growing thereafter. (This is on top of the $5.6 billion in cuts over five years, result- ing from formula changes in the 1989 budget). © PM Mulroney: away from the protesters and on his way to a $250 plate Tory fund- raiser. © Child Care The government has shelved its $6.4 billion national child care pro- gram, except for the tax break portion (already in place) which benefits more affluent families. ° Regional Development Expenditures to government bod- ies which promote regional develop- ment currently at $1.4 billion, will be cut 30 per cent or $1.6 billion over the next four years. © Cultural Programs Grants to the CBC will be cut by $140 million. This will undoubtedly reduce service to the regions and scut- tle CBC’s Canadian context program. The $164 million postal subsidy will be cut by $45 million by next year. This could kill small Canadian pub- lishers whose survival depends on these subsidies. © Government Programs Overall This is perhaps the clearest indica- tor of how Tory ideology has devas- tated the public sector. When the Tories came to power in 1984, govern- ment program spending was 19.5 per cent of Gross Domestic Product (GDP). That level has fallen to 16.7 per cent after four years of Tory gov- ernment and will drop to 15.2 per cent by 1994. What this means is that, assuming status quo in terms of government’s role, the Tories have cut $16.8 billion from public spending in their first term and intend to cut another $17.7 billion by the end of their second mandate. e Remember the Fleck strike? Fleck manufacturing, the Canadian auto parts company which shifted production from Canada to a plant in the Maquiladora during the election campaign, will soon open another plant in Mexico employing 650. Right now Maquiladora employees earn $5.00 per day. So the worst fears of the 1978 Fleck strike have been confirmed. Canadian workers are competing directly with the 19th century sweatshop condi- tions in the Maquiladora. However, the Conservative govern- ment continues to deny the threat from the Maquiladora. LUMBERWORKER/JUNE, 1989/3