Canada and Cameron

Headlines yesterday concentrated on the Cameron speech that warned of years of austerity ahead to ensure that we cut the deficit, the “worst in British History”. But less well publicised were the proposals for a Canadian-style “star chamber” type exercise.

As the Guardian put it
“The most radical plan involves importing a Canadian-style "star chamber" in which members of the cabinet will be forced to justify their budgets in front of a group of ministerial and civil service heavyweights.” http://www.guardian.co.uk/politics/2010/jun/07/cuts-change-british-way-of-life-david-cameron

Importing aspects of our political system from Canada is a new route for us. However as we bequeathed our Parliamentary system, perhaps some reciprocation is to be expected. So what are we getting?
http://21stcenturysocialism.com/article/beware_the_canadian_austerity_model_01989.html offers an explanation

Cameron believes that debt reduction is the way forward. Previous articles on this blog have seriously questioned that assumption and we continue to deny that it is any way forward for the British economy and our class.

The Canadian model in which Cameron has taken such an interest is based on the type of reduction introduced by Paul Martin the country’s Finance Minister from 1993 to 2003.It is true that he cut the Canadian deficit. What makes the Canadian experience so interesting to Cameron is the way in which this was achieved. Martin tackled the deficit not by increasing the Government’s tax take (, through increasing taxes to finance public spending), but through reliance on spending cuts.

At the time, Canada’s tax levels were not only well below EU tax rates but also well below that of its immediate neighbour, the USA.

What did that mean in reality? Access to benefits was restricted and maximum benefit frozen for a decade. Social programmes such as public health care and welfare programmes were slashed. This included child care and early learning programmes. It goes without saying that poverty rates remained at recession levels for nearly a decade. UNISONActive has already predicted these developments in its analysis of the Tory plans for the Welfare State, published on this site as Welfare to Workfare.

Was the Canadian experiment really necessary? They cut the deficit, they made the cuts. But according to the Canadian Economics Association,

“Rising debt was not the result of over spending but of a very deep recession, 1989 to 1992, exacerbated by exceptionally high interest rates inflicted by the Bank of Canada in the search for the Holy Grail of zero inflation”

From the General Election, the bulk of professional economists in this country have been warning against the Tory interpretation of economic policy. But still....

“The prime minister (Cameron) aid today that there were three simple reasons for tackling the country's debt: the cycle of increased government borrowing results in less confidence in the economy as lenders start to worry about repayments; the threat of investors turning away from Britain if they believe the economy is not run properly, which in turn risks higher interest rates; and there is an adverse impact on families and businesses in the shape of higher mortgages and fewer jobs.”

As in Canada, the Tories and their allies in the media are fanning a fear of a non existent crisis to impose their brand of neo Liberal ideology in this country.

Cameron went on to say

“that the UK's position was better than that of Greece, which has been left in financial and social turmoil in the wake of the credit crunch.”

If the present government proceed with their plans, that financial and social turmoil may come to pass.