British Columbia

By HARVEY WEINER

Whatever your views on the Canada- U.S. Free Trade Agreement, and whether or not you believe Canadians were snoo- kered by the deal, you would be hard pressed to avoid making the connections between the FTA and the proposed Goods and Services Tax. The connections include recent changes to the Unemploy- ment Insurance Act and our interest rate policy. They are all part of an economic package and strategy that significantly affects education and other social services in Canada.

The government agenda is privatiza- » tion, competition, and survival of the fit- test. Those who can will, and those who can’t will fall by the wayside. The law of the jungle applies to both business and social services. The net is all-encompassing. No one escapes. GST reform in this con- text is requisite for the successful imple- mentation of the FTA.

Why? — because most economists be- lieve that free trade without federal sales tax reform would spell disaster for Cana- dian manufacturing.

Another contributing factor is Bank of Canada Governor John Crow’s interest rate policy, which is primarily designed to fight inflation. The combination puts manufacturers in double jeopardy. A Canadian dollar valued at about 85 cents U.S. hurts our productivity and competi- tiveness with the United States. Crow’s policies, coupled with the present seriously flawed federal sales tax imposed at the manufacturer’s level, discriminate against Canadian manufacturers in both domestic and export markets. Hence, most econo- mists see the GST, even Wilson’s trun- cated version,as.a remedy for what would be an extreme disadvantage for Canadian manufacturers.

Flaws in the current system are well

documented. Michael Wilson, in his June 18, 1989 discussion paper on sales tax reform, claimed that the federal sales tax on domestically manufactured goods averaged 33 per cent higher than the tax on imports. This situation would worsen with the removal of the tariff on imports under the FTA. Multinational firms could find it more economical to shut down Canadian plants and meet Canadian market demands from plants south of the border. Canadians could also decide to move pro- duction abroad to take advantage of the

‘The GST and the FTA are a complementary package. They go together like a horse

and carriage.’

lower tax on imports. Such moves would have serious, if not disastrous, consequen- ces for Canada.

The Free Trade Agreement, therefore, locks the Mulroney government into the GST mode. The GST, in this context, becomes essential to implement the FTA.

What, you might ask, do the FTA and the GST have to do with social services programs? Why should we be concerned? Let’s look at health services for a moment. Patients won’t pay GST on medical servi- ces. However, hospitals, doctors, and laboratories will pay the new tax on servi- ces that they use, and they are forbidden to pass the cost on to consumers. Hospitals are now exempt from federal sales tax on services they buy, from laundry and kit-

GST, free trade and the Tory agenda

chen services to administrative and con- sultative overhead costs. Under the GST, that would disappear. The possible conse- quences, according to the Canadian Medi- cal Association, are dirty hospital linens, the closure of many private nursing homes and businesses providing home care for the elderly. The businesses can pass the GST on to their customers, but many elderly patients on restricted incomes, unable to pay, will end up in hospital, presumably at far greater expense to the system.

Provinces will be hard pressed to make up the difference to avoid these problems and others, particularly when Bill C-33, which is to reduce the annual increase of financial support to provinces for health care, is scheduled to become law in 1990.

Canada education escape this pattern? The government’s proposed treatment of educational services exempts most from the GST. This includes courses provided by either public or private non-profit ele- mentary and secondary schools following the approved curriculum of their province, as well as all instruction for diploma or degree courses provided by publicly- funded colleges and universities.

What, then, do the FTA and the GST have to do with education? Why should teachers be concerned?

The evidence warranting concern is mounting. Many costs built into the GST system will sap already limited and often education resources. Moves to privatize some education services are also being dis- cussed seriously in many quarters. These discussions have been transformed action in some provinces. Post-secondary educa- tion programs in Saskatchewan and tech- nical vocational programs in Quebec are two areas in which the trend to privatiza- tion is evident.

Furthermore, U.S. wages, working

the horse and carriage. The absence of

conditions, and benefits are generally infe- rlor to those in Canada. U.S.-Canada comparisons are inevitable on these items, and such comparisons will apply to teachers as well. Privatization and cost efficiency will undoubtedly become major employer themes in future contract nego- tiations.

The most divisive issue in future federal- provincial economic relations likely will not be Meech Lake or the GST but cut- backs in federal transfer payments to the provinces. This is a crucial issue for Cana- dian educators. Transfer payments are required to maintain and improve the quality of education and other social ser- vices in most Canadian provinces. They are essential to providing equality of edu- cational opportunity to every student. This year alone, Ottawa will pay out $24 billion in federal tax revenue to provincial governments at the same time as it strug- gles to keep its own deficit under control. If payments are cut, provinces will be required to increase taxes to maintain and improve programs. Those unwilling to do so will have to reduce services.

The GST and the FTA are a comple- mentary package. They go together like

fairness, the impact on social services, including education, concern us as Cana- dians and, more specifically, as teachers. It is upto the Canadian Teachers Federation and member organizations to exercise vig- ilance and leadership to ensure that good public school education does not go the way of the dinosaur. That is our most formidable challenge for the 21st century.

Harvey Weiner is the deputy secretary general of the Canadian Teachers Federa- tion. This article, which is reprinted from the January, 1990 issue of the B.C. Teacher, is based on a speech he gave to the Pro- Canada Network.

School referendums spark outcry among trustees, parents, teachers

Continued from page 1

seventh in expenditures in Canada — forced a majority of school districts to seek as much as 25 per cent additional funding through local taxes last year.

Brummet has said the ministry will roll in the alleged excess expenditures into the government’s block funding, increase it by six per cent next year, and provide auto- matic yearly increases based on local wages and prices.

Unknown is what percentage of overall education costs the province will pay, and what kind of taxes local homeowners will be

paying.

What is certain is the opposition of the —

entire education community to a system that smacks of California’s infamous Pro- position 13 and which has local boards in several U.S. states spending time and energy on referendums that frequently fail.

“We're still ina period of catch-up” com- ing out of the restraint years, said Nova- kowski, and the government’s arbitrary figure of a six-per-cent hike next year is presumptuous and does not answer each

'district’s individual needs. “‘It begs the ques- tion: Why have school boards?”

He noted the government’s seizure four years ago of boards’ powers to tax industrial and commercial properties, pointing out that big business’ share of education costs has plummeted under provincial control.

For the last two years the ministry’s Edu- cation Advisory Council has been hearing suggestions for financing from groups in the

Lee

education community. No one suggested anything like funding referendums, Hing- ston related. :

He said the trustees association recom- mended that the government increase block funding to replace the supplementary spending raised through school taxes by boards, from general revenues. “So they’re following our advice, but in a backhanded sort of way.”

BCSTA communications director Steve Bareham said referendums for boards who spent more than 110 per cent of the government allocation were used in the late Sixties and early Seventies by W.A.C. Ben- nett’s Socred government, but were abol- ished when the New Democrats came to power in 1972. That year, before the elec- tion, 38 referendums were held and only six passed.

Statistics Canada figures show that B.C. spent 23.45 per cent less on education that the average of all provinces in 1988-89. It spent 34.53 per cent less than Ontario that year.

B.C. spends approximately $300 less per pupil on education than the national aver- age. Next year the disparity will likely increase to about $530 less than the national average, Bareham said.

Meanwhile, the share of education expenditures as a portion of the provincial budget has fallen steadily during the decade: in 1981, it accounted for 25.2 per cent; this year, it constitutes 17.48 per cent.

Back in June, 1988, Premier Bill Vander Zalm floated the idea of school referen-

dums, and Hingston responded then: “In reality they would create tremendous edu- cational inequality as voters in richer dis- tricts could afford additional expenditures while people in less prosperous districts couldn’t.”

At that point, education expenditures had risen about 11 per cent since 1982, the first year of the Socred restraint program. In the same period school taxes for local resi- dents rose 77 per cent, he pointed out.

Brummet has claimed his referendum concerns spring from an impending “tax- payer revolt,” even though a ministry sur- vey just released shows 64 per cent of British Columbians think education funding is about right. Another 25 per cent think the system needs more money.

More likely the ministry is eyeing another survey, reported by Vancouver Sun colum- nist Vaughn Palmer, which studied gains made in wages and working conditions by teachers since they unionized. The Socreds are banking on wages being an unpopular item in a school funding referendum.

If the referendum notion was intended to divide the education community, it failed. The BCSTA, the BCTF, the now- independent B.C. Principals and Vice- Principals Association, the Parent Teacher Association — diverse groups, all — have vowed to oppose the plan.

President Geraldine McGuire of the

‘Canadian Union of Public Employees’ B.C.

division said her members opposed the ref- erendum idea, not only as trade unionists

CHARLES HINGSTON ... fears for the long-term.

who work for school boards but as parents and taxpayers.

“If the government is so concerned about school taxes, they should be looking at the industrial and commercial tax base. But then, that’s where their friends are,” she charged.

McGuire said she is seeking a meeting ‘with Brummet and has one scheduled with NDP education critic Anita Hagen.

The plan may be aimed right now at teachers’ wages, banking on a belief that these are unpopular. But down the line, textbooks, school supplies and courses may be on the chopping block.

“My main concern is not short-term, it’s the long term,” Hingston said.

Pacific Tribune, February 12, 1990 « 3

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