Conservatives target the unemployed with EI changes

This article was originally published at Fightback.



Strict new changes to Canada’s Employment Insurance (EI) program took effect across the country on Jan. 6. The Conservatives’ plans to “reform” EI have been public knowledge since the Harper government tabled its last federal budget in March. Minister of Human Resources and Skills Development Diane Finley claimed the new changes merely clarify what is expected from EI claimants and help better connect job applicants to available work. In reality, they represent the latest attempt by the Canadian bourgeoisie to make workers pay for the ongoing capitalist crisis through austerity and a reduction of the social wage.

Henceforth, EI claimants will be divided into three categories. “Long-tenured workers” have paid 30 per cent of their maximum annual EI premiums for seven of the last ten years, and collected benefits for less than 35 weeks during the past five years. “Frequent claimants” have filed more than three claims and collected more than 60 weeks’ benefits over the previous five years. Anyone else is classified as an “occasional claimant.” The net effect is to divide EI claimants between those who pay into the program but never or rarely collect benefits and those who make more frequent claims.

The revamped EI program will also introduce more stringent definitions of “suitable employment” and what constitutes a “reasonable job search” (in other words, preparing resumes, attending job fairs, and applying for jobs and job banks). Under the new regulations, the government will consider several factors when considering whether an EI claimant is suited for a particular job, including wages, type of work, commuting time, working conditions, hours of work and personal circumstances such as family obligations. As an example of what is considered “suitable,” the regulations define an acceptable commuting time as one hour each way — although, it could also be a figure that “could be higher taking into account previous commuting history and community’s average commuting time.”

Particularly hard-hit by the changes will be the Atlantic provinces, the economies of which are more dependent than the rest of Canada on seasonal employment such as fishing. During the winter months, when there is little work to be found in rural areas, many residents rely on EI payments before returning to their jobs when the season starts. In the wake of Harper’s restructuring of the program, frequent claimants may be required to take available work off-season rather than waiting for their old jobs to start up again — even if the new job pays 30 per cent less and is located an hour’s drive away.

While the government portrays the EI changes as common sense reforms designed to reduce waste while making it easier for people to find work, the reality is more complicated. In truth, EI “reform” represents the latest bourgeois attack on workers as the ruling elite seeks to make the most vulnerable members of society pay for the crisis of their system. Seizing on the pretext of a vast increase in the federal debt caused by corporate tax cuts and bailouts to banks and auto companies, the bosses are clawing back every historical gain of the Canadian working class.

As it aims to restore conditions of profitability, one of the biggest targets of the capitalist class is the social wage, which consists of benefits paid through the bourgeois state that workers managed to wrench from the bosses over years of struggle. This includes pensions, health care, and unemployment benefits. In order to pay off the debt and restore the rate of profit, capitalists are targeting every social program they can find as a source of savings. As always, the human cost of restoring economic equilibrium to the capitalist system is borne not by those who order the cuts, but by ordinary working people.

Youth and female workers, in particular, stand to lose out, as they are the most vulnerable to long-term changes in the job market that have reduced eligibility for EI. In recent decades, demand for ever-greater “flexibility” in the labour market has created a shift towards more temporary and part-time employment. This is reflected in numbers from Statistics Canada, which reported that 78.4 per cent of Canadians who lost their jobs in 2012 were eligible for EI benefits, compared to 83.9 per cent in 2010. In an economy that emphasizes the disposability of the worker, fewer and fewer people are able to reach the threshold of 420 to 700 working hours (generally only attainable at a full-time job) that allows them to qualify for benefits. The same Statistics Canada report noted that among EI contributors, the share working in full-time jobs decreased from 51 per cent in 2011 to 40 per cent. Eligibility rates for women and youth both dropped.

By making it harder to qualify for EI benefits and instituting a sliding scale of benefits that decreases benefits for each week the recipient is out of work — all while making no effort to reduce premiums — the Harper government is tightening the screws on the unemployed and forcing them to accept work in the more precarious short-term, temporary or part-time positions that increasingly dominate the economic landscape in advanced capitalist nations. At the same time, cutting benefits while maintaining premiums will provide the government with an additional source of funds to pay off the federal debt should EI once more generate a surplus.

Such a manoeuvre would come as no surprise from the Conservative government, which funnelled $55-billion from the EI surplus to help pay off the debt in 2008 — a move that then-NDP leader Jack Layton described as “the biggest theft in Canadian history.” But Harper’s theft was only the most recent in a series of attacks that have plagued EI for decades.

Unemployment Insurance was first established as part of Prime Minister R.B. Bennett’s Employment and Social Insurance Act of 1935, and was later expanded by the Liberal government of Pierre Trudeau, which made benefits more generous and easily available. Since 1971, those benefits have been cut and cut again. The federal government, originally obliged to make financial contributions to the program along with employers and employees, gradually reduced its contributions until they were eliminated completely by 1990.

The Progressive Conservatives cut EI in 1990 and 1993, before the Liberals took over the hatchet and cut it further in 1994 and 1996. Amendments made eligibility more difficult by increasing the hours of work needed to qualify. The Liberals’ role in cutting EI cost them dearly in lost votes from the Atlantic provinces during the 1997 election. After Harper was elected in 2006, the Conservatives refused to recognize the existing EI surplus, and in 2008 adopted legislation freezing the surplus indefinitely and putting EI premiums on a pay-as-you-go basis. That same year, the Supreme Court of Canada rejected a court challenge from two Quebec trade unions, the Confederation des syndicats nationaux (the province’s second largest union, representing 300,000 workers) and the Syndicat National des Employes de l’Aluminium, arguing that the government had misappropriated EI funds.

Now the Conservatives have further escalated their attacks on EI. The new changes are only the latest manifestation of the austerity the party has been mandated by the capitalist class with spearheading, and which is being felt in every area of economic life through cuts, layoffs, and downsizing. In simple terms, EI “reform” will force the unemployed to more quickly accept one of the precarious, low-wage jobs that are the new norm in Canada by making it more difficult for them to survive.

A larger point must also be considered. In the last analysis, the welfare state, which includes programs such as Employment Insurance, is only an attempt by the capitalist state to compensate for the failings of capitalism itself. Ever-subject to the irrational whims of the market, the capitalist system relies on what Marx called a “reserve army of labour” (the unemployed) to help keep wages down. The resulting waste of human potential is staggering. However, in most capitalist economies, unemployment has gone way over and above what Marx would consider a “reserve army”. Persistent, chronic, and endemic unemployment undermines the system from within. Where the anarchic free market permits human beings to suffer when their labour is not required, a rationally-planned economy would allow society to fully utilize all of the “human resources” at its disposal.

As part of an omnibus budget bill passed by Harper’s Conservative majority, the EI overhaul will go through as planned unless stopped in its tracks by a popular mass movement. Canadians have seen two such movements recently in the forms of the Quebec student strike — which targeted the tuition hikes of the Charest government — and Idle No More, which is currently engaged in an all-out battle to stop the implementation of Bill C-45. At first glance, the unemployed appear only as a small minority of the general population. But the same could be said for the Quebec students and First Nations activists who nonetheless pushed their concerns onto the national agenda, and through their efforts earned a great deal of support from the wider working class.

The NDP and many union leaders have come out strongly against the changes to EI. But ultimately, cuts to assistance for the unemployed are only a symptom of the larger problem: an economic system of which unemployment is the inevitable by-product. Bourgeois economists that refer to a so-called “normal” level of unemployment reflect the degree to which our present society has acclimatized itself to a certain, seemingly inevitable degree of human suffering. And indeed, so long as the means of production are privately-owned and geared towards profit, a certain subset of the population will be condemned to idleness and deprivation.

Only a planned economy under democratic workers’ control, where the means of production are publicly-owned and oriented towards the fulfilment of social needs, will allow society to eliminate the scourge of unemployment once and for all.

Keith Jones and the Socialist Alternative

The dysfunctional state of Canadian politics may be a regular topic of discussion among the nation’s leading news outlets, but the system itself is rarely challenged. While the New Democratic Party is derided by conservative elites as “socialist”, its actual policies leave much to be desired among Canadian progressives (to note but a few examples: dropping all serious opposition to the war in Afghanistan, propping up the Harper government, rebranding itself as a “business-friendly” party dedicated to balancing budgets while the vast legions of unemployed continue to suffer).

The need for a challenge to political business as usual has rarely been more urgent. While Kingston has been insulated to some degree from the ravages of the Great Recession due to its large public sector workforce, the city has nevertheless suffered from the economic downturn. The local unemployment rate rose from 5.1% in February 2009 to 5.5% in February 2010, according to Statistics Canada. Well over 18,000 people live below the official poverty line, based on 2001 census numbers (the most recent data available for this area). And with one of the lowest vacancy rates in the country, affordable housing has become increasingly hard to find.

But politically speaking, Kingston remains a Liberal stronghold, represented by Speaker of the House Peter Milliken federally and MPP John Gerretsen provincially. Voters looking for left alternatives are effectively tied to the NDP and the Green Party. More radical parties, such as the Communist Party of Canada, have abandoned Kingston, directing their supporters to vote either Liberal or NDP depending on the comparative strength of the Progressive Conservatives. The radical left, in effect, barely registers on the electoral radar, whether in Kingston or nationwide.

Hoping to fill that void is the Socialist Equality Party. The SEP is a Trotskyist party affiliated with the International Committee of the Fourth International. While originating in the United States, the party aims to create an independent working class political movement with an international perspective, based on the Marxian principle that “the workers have no country.”

The SEP’s youth wing, International Students for Social Equality, has a Queen’s chapter organized by history student Graham Beverley. On Wednesday, March 31, the ISSE invited Keith Jones, national secretary of the Socialist Equality Party (Canada), to speak at Mackintosh-Corry Hall.

Jones is a regular writer for the World Socialist Web Site, the SEP’s primary means for communicating its ideas. A teacher for many years, Jones writes on Canadian and international issues for the WSWS, which analyzes world news from a Trotskyist perspective (for the uninitiated: Leon Trotsky was a leading figure in the Russian Revolution who was exiled from the USSR and eventually killed on Stalin’s orders. He and Stalin engaged in a power struggle after Lenin’s death partly based on differing ideas: Stalin’s “socialism in one country” vs. Trotsky’s “permanent revolution”. Trotskyists are staunch anti-Stalinists who harshly criticize the former USSR as led by a counterrevolutionary bureaucracy).

In sharp contrast to what it derides as the “reformist” tendencies of social democratic parties like the NDP, the British Labour Party or the German Social Democrats, the SEP follows a sharply anti-capitalist line. Their website explains:

The Socialist Equality Party is a political party of and for the working class. The SEP seeks not to reform capitalism, but to create a socialist, democratic and egalitarian society through the establishment of a workers’ government and the revolutionary transformation of the world economy. We seek to unify workers in the United States and internationally in the common struggle for socialism—that is, for equality and the rational and democratic utilization of the wealth of the planet.

Speaking at Queen’s to a small audience of half a dozen committed socialists (and one or two curious newbies), Jones presented a harrowing view of the Harper government rooted heavily in class analysis. He began:

It is the contention of the Socialist Equality Party, that this government both represents a continuation, in a certain sense, a natural evolution from the right-wing policies that were carried out by the Liberal governments of Jean Chrétien and Paul Martin, but also that the Harper Conservative government represents something new…a further lurch to the right…and has carried out a series of significant attacks on democratic rights.

The Harper Conservatives have co-opted an aggressive style of partisan politics from U.S. Republicans (such as referring to NDP leader Jack Layton as “Taliban Jack”). In a climate of deepening inequality, Jones argued that Canada’s ruling elites have cultivated such reactionary appeals as a means of building a social base for their anti-democratic, anti-egalitarian agenda.

Recalling the 1993 federal election, Jones noted that the Liberals ran on a platform that included three main points:

1. Overturning the conservative policy of focusing on the deficit at the expense of jobs;
2. Eliminating the GST, and
3. Getting Canada out of NAFTA.

On this side of history, those pledges now look ridiculous, since the Liberals quickly used their electoral victory to begin dismantling the welfare state. Unemployment Insurance was reduced to Employment Insurance; today, less than half of workers are entitled to it. The haemorrhaging of Canada’s manufacturing sector also began under the Liberals.

The Chrétien government justified massive cuts to social spending by citing a supposed deficit crisis, with the same pattern playing out nationwide. In Ontario, the Conservative government of Mike Harris sharply reduced government spending; Harris initiated a draconian program of spending cuts, taxes on unions, and slashing welfare rates by 21% while cutting taxes for corporations and the wealthy. In Quebec, Lucien Bouchard’s Bloc Quebecois carried out similar cuts with the collaboration of the trade unions.

While the SEP is committed to working with the trade unions, the party has long criticized the unions’ bureaucratic leadership, which it sees as having interests antithetical to those of the workers they claim to represent. In a recent example, the Canadian Auto Workers leadership collaborated with General Motors and the Canadian and U.S. governments to force its members to accept deep wage and benefit cuts.

Jones characterized government actions from 1995-2000 as a massive reversal of the social benefits won by workers in the years after World War II, when widespread anti-capitalist sentiment – bolstered by the traumatic experience of depression and war – compelled even Liberal prime minister Mackenzie King to run under the slogan “For a New Social Order”. In the immediate postwar era, a worldwide offensive of the working class produced universal healthcare for Canadians, as well as the American Civil Rights Act and Great Society programs. Protests against the war in Vietnam created a thriving counterculture that sufficiently unnerved the ruling classes to result in a reactionary backlash at the end of the 20^th century in the form of conservative rulers Ronald Reagan and Margaret Thatcher.

By the end of the 1990s, the Liberals’ policies had borne the fruit of a balanced budget, but the tax system had been radically redesigned to serve the interests of the wealthy. Canadian fiscal policy now corresponds with Lenin’s observation that the state is “an apparatus for the domination of one class over another.”

The effects are visible in Harper’s recent budget and the austerity programs currently being pushed by governments worldwide. In Ontario, Premier Dalton McGuinty has introduced the harmonized sales tax, heavily favoured by big business because it transfers the tax burden from businesses to consumers. Kingston MPP and Environment Minister John Gerretsen supported the HST, but managed to conveniently miss the actual vote.

The Harper government has also built on the Chrétien-Martin legacy by increasing military spending. In 1999 Canada played a leading role in NATO’s campaign in Yugoslavia, and it was the Chrétien government that initiated Canada’s involvement in the Afghan War. While it did not officially sign on to the Iraq War, the Liberal government’s lack of support was characterized by Jones as an eleventh-hour decision finalized only when it became clear France and Germany would not support the invasion. The Chrétien government recognized that Canada’s global position might be jeopardized by flagrant U.S. unilateralism. Yet Canada played a larger role than many official members of the “coalition of the willing”; only two weeks prior to the invasion, Canadian military planners helped design the “Shock and Awe” bombing campaign. Jones stated:

In effect, what is being said here is that if the Canadian ruling elite is going to be able to advance its interests on the world stage, it has to be an active participant in the division and redivision of the world, and certainly has to align its foreign policy even more closely with that of the United States.

It was a Liberal government that first attacked democratic rights by overturning key civil liberties in the heat of post-9/11 hysteria. Jones was careful not to overlook the role of current Liberal leader Michael Ignatieff, a supposed human rights expert who supported the Iraq War and helped provide the intellectual framework to justify torture in his book The Lesser Evil.

Economically, the Harper government has continued Liberal tax cuts that transfer wealth to the already wealthy, as well as reducing the state’s fiscal capacity in order to erode social programs and thwart their further expansion. Harper has been a huge proponent of the discredited policy of deregulation; when the government was obliged to hire new meat inspectors for Canadian exports to the United States, Harper advocated “self-inspection” by companies. Deregulation, Jones noted, is intimately tied up with the government’s unhelpful attitude towards the tar sands and global warming.

Current events have followed a similar pattern in all capitalist countries. There has been a vast increase in social inequality, most marked in the United States, but by any measure an international phenomenon. In the fall of 2009, Western governments put up hundreds of billions of dollars to back up the same financial aristocracy that had mercilessly pushed an anti-working class agenda over the last few decades in the name of efficiency. Jones went on to say:

Recent months have proven to be extremely profitable for Canada’s banks, as it has banks in the United States, and of course these same banks are resisting tooth and nail any suggestion – not that they need to worry about it from the Harper government…that there should be increases in taxes because the banking system worldwide has benefited from state support.

The financial system has been held together; at one point there was serious concern it was going to completely collapse. It’s been held together by basically socializing the debt, by transforming the debt of these large financial institutions and making them into government debt. And now of course, what we’re seeing is all over the world, big business is demanding, and governments are delivering, massive budget cuts on the grounds that these debts are unsustainable. They have to be repaid, and who has to repay them? They’re going to have to be repaid by working people, in the form of cuts to social programs and social services, university tuition hikes, other fee hikes, and this is now beginning.

Jones cited austerity measures announced in recent weeks by the federal Conservative government, the Ontario government and the Quebec government, which he says will lead to a change in class relations at least as significant as those in 1995, as big business takes the wrecking ball towards whatever remains of the welfare state.

For example, The Globe and Mail – disparaged by Jones as the voice of Bay Street – has lately been talking about the “unsustainability” of Medicare. He summarized their view as, “we’ve got all these people that are getting old, we’ve got these massive debts, what the hell are we going to do? We need to find new sources of funding for health care.” The reality, he said, is that Canadian elites intend to use the crisis created in the health care system by government budget cuts to build up a popular constituency for the dismantling of Medicare and the promotion of private health care.

“There are two objectives behind this,” said Jones. “First, they want to transfer the burden of health care back onto the individual. And secondly, health care is a massive business, and they want all obstacles and impediments to making profit off of this business…removed.”

Such open class war, Jones declared, would provoke massive resistance by working people – resistance that must be guided by socialist principles.

Jones ended his lecture with a discussion of the political crisis of November/December 2008. He argued that while Harper succeeded in proroguing Parliament with the support of the Canadian elite, the programme of the potential Liberal-NDP coalition government would have been equally right-wing: fiscal responsibility as primary concern, implementing Harper’s corporate tax cuts, and staying in the Afghan War until 2011. Of course, like Harper, the Dion-led government would have taken “some” action to stimulate the economy – mainly to ward off social unrest and keep Canada competitive with other countries.

In rock ‘n’ roll terms: meet the new boss, same as the old boss.

Since the programme of the coalition government was so similar to Harper’s, why did Canadian elites so vehemently oppose it?

“The reason that they opposed it was, quite frankly, because they didn’t think it was necessary under these conditions,” said Jones. “Certainly they have had a situation where the NDP has had a share of power – not federally, but in various provinces – and while the NDP hasn’t necessarily done everything that big business has wanted, it certainly has shown itself to be a party that is devoted to the capitalist order in Canada and will carry out right-wing attacks against the working class, impose austerity measures and so forth. But big business didn’t want to see a government of this particular composition at this time, and it was quite prepared to see democratic rights – basic parliamentary norms – set aside to prevent it from coming to power.”

Jones posed the question to his audience: if elites will happily disregard democratic norms to serve their own interests, as in this case, what would they do in the face of a real challenge by the working class? The Liberals, the NDP and the trade unions were all willing to join in a right-wing programme and played possum after Harper shut down Parliament. These groups, Jones argued, are dedicated to preserving the existing order and serve as a “safety valve” for the bourgeoisie.

Jones pointed to the memoirs of NDP national campaign director Brian Topp, which detailed Liberal-NDP coalition negotiations in which the first priority was picking a cabinet, with policy a distant second. The NDP has been pushing for a coalition since 2004, and Layton continued to plead for one long after Ignatieff made it clear he was not interested. While the NDP feared an election, they also wanted to show big business that it had nothing to fear from an NDP government. Since September 2009, the NDP has supported the Conservatives after gaining minor concessions to unemployment benefits.

Jones urged students to help the working class break free from their nominal leadership, the NDP and the trade unions, which have become completely integrated into the capitalist establishment. Canadian youth, he stressed, were one of the primary social groups that could assist the working class in advancing a truly socialist programme.

The discussion period that followed weighed realistic strategies for advancing a socialist agenda in Canada. Asked what he thought of the Communist Party of Canada, Jones dismissed it as defending the legacy of Stalinism. While the CPC has admitted to certain mistakes by the Soviet Union and the CPC, it still holds that the political line of the Soviet leadership was basically correct. Historically, the CPC justified Stalinist opposition to the proletarian internationalism that was the hallmark of Leon Trotsky (and lately, the SEP). It promotes Canadian sovereignty from American imperialism, an overly nationalist perspective in the view of the internationally-minded Socialist Equality Party. The CPC supported the NDP-Liberal coalition and, according to Jones, appeared overly enthused by the election of Wall Street puppet Barack Obama. Finally, it has mainly devoted its energy to pressuring existing political parties (and therefore, in Marxist parlance, advocating a “reformist” stance”).

To borrow another phrase from Lenin, what is to be done? Over the past few decades, social democratic parties have steadily dismantled the very social programs they claimed showed that capitalism could be reformed. For Jones, the key task is to develop an independent, non-reformist political formulation to lead the working class.

The deepening of geopolitical conflict in the midst of the economic crisis, Jones predicted, would have a radicalizing effect. Unions in 2010 have a very different perspective than unions in the 1970s, let alone the more militant 1930s. Although there has been a “huge degeneration” in workers’ class consciousness, the basic idea of unions – that the rights of the working class can best be defended through collective bargaining – remains as viable as ever. But actual class struggle will always be an uphill battle; witness the widespread derision that DriveTest employees (represented by the United Steelworkers) faced when they went on strike last year.

Revolutionary socialists, it seems, must work outside existing state structures in order to achieve their desired end: a society based not on the pursuit of profit but on serving human needs.

HST Squeezes the Poor

McGuinty makes his move:

Ontario's Liberal government has introduced legislation to harmonize the province's eight per cent sales tax with the five per cent GST.

The bill, tabled Monday afternoon at Queen's Park, creates a single, 13 per cent sales tax that will take effect next July. The bill also includes a series of cuts to income, small business and corporate taxes that would take effect in January.

The province needs to make businesses more competitive so they can hire more people and lower prices for consumers, Finance Minister Dwight Duncan said. The tax package is about creating jobs and rebuilding Ontario's economy as it emerges from the recession, he said.

The bill provides for tax rebate cheques of up to $1,000 for families to help offset the impact of the HST in the first year.

The opposition parties call the HST a blatant tax grab that will add eight per cent to many items now exempt from the provincial sales tax, including gasoline, home heating fuel and hydro bills.

Ontario's New Democrats said the Liberal government is kicking people when they're down.

The Premier reacted to NDP concerns by accusing that party of living in the past and viewing all corporations as evil. It's an arrogant slap in the face to anxious Ontarians who had been hoping the government might address their concerns rather than those of the Liberals' largest campaign donors. In his condescending way, McGuinty dismisses those who worry that the government is placing the interests of Big Business ahead of those struggling to get by in these tough economic times, by characterizing them as blinded by old-fashioned leftist ideology. One might be forgiven for thinking that after capitalism's 2008 meltdown, a new approach was called for. But in the halls of power, neoliberalism is still king, and according to McGuinty, the people should shut up and make sacrifices so as to make Ontario businesses more "competitive".

Under the current tax system in Ontario, certain essential consumer goods are exempted from the GST, introduced by Brian Mulroney in 1991 in a bid to make Canadian exports more competitive. Some of these exempt items include basic groceries, prescription drugs, inward/outbound transportation and medical devices. Under the new Harmonized Sales Tax, the GST and PST will be combined to establish a basic tax rate of 13% on all consumer goods. As the opposition parties have suggested, this will dramatically raise the price of many basic survival items and impose a higher burden on the middle and working classes, particularly the poor and those who are currently unemployed.

The Liberals' decision to protect corporate interests rather than working families is a clear sign that they know which side their campaign bread is buttered on. It is essential that Ontarians see through McGuinty's gauze-covered lies and demand that their representatives support the struggling people who elected them. The votes on this bill may have been counted already, but it's not too late to organize a broad working-class movement that will counter the pernicious influence of Big Business on the Ontario legislature.

Ontario Caters to Big Business

The latest issue of the People's Voice has an article by Ontario Communist Party leader Liz Rowley on the McGuinty government's plan to deal with the recession. The news isn't good, and as always, corporate interests are firmly in the driver's seat:

In his October 22 economic update, Ontario Treasurer Dwight Duncan told us how well the Liberal government is handling the global economic crisis. Then he got to the nub of things: 205,200 jobs lost in the first 7 months of the year, an official unemployment rate projected to rise to 9.9% this winter, the continuing decline of manufacturing and secondary industry, forestry, mining, and construction. For working people, that means falling incomes, more personal bankruptcies, and a huge uptake in Ontario Works (social assistance). Seriously under-funded social programs and public services will no longer be paid from the corporate and personal income taxes which have sustained them for 60 years. Social programs will now be paid for (or not) out of revenues generated by the HST (Harmonized Sales Tax) which will be introduced in July 2010.

Why is this happening? Because corporate profits fell 49.7% in the last year, and corporate tax revenue fell 48.1% in the same period. According to the Liberals, it's up to the public to bail out those corporate profits by cutting the Marginal Effective Tax Rate by 50% (from 32.8% to 16.2%), to make Ontario one of the lowest corporate tax jurisdictions in the industrialized world for new investment.

How will they do it? By eliminating the Capital Tax (a tax on capital, not labour), by reducing the Corporate Income Tax (CIT) by $4.5 billion a year, and by rebating $4.5 billion in Input Tax Credits to corporations which, under the HST will pay a fraction of the sales tax they pay today. That's why corporations support the HST.

The cut to the provincial CIT from the current 14% to a bargain basement 10%, combined with Harper's cut to the federal CIT to a new low of 15% by 2012, will result in a combined 25% CIT rate. That's lower than most corporate tax rates in the industrialized world, and 15 percent lower than the US Great Lakes states with which Ontario competes.

Who will pay then?

The public of course. The Liberals have cut a deal with the Harper Tories to legislate a 13% HST on all goods and services sold in the province, with a few exceptions. The HST will add another 8% to many necessities currently taxed at 5%. Like other VAT (value added) taxes levied in Europe and elsewhere, the initial rate increases over time. The 13% HST will almost certainly do the same. It's a shell game that will see working people take on almost 100% of the tax load, while corporations see their sales tax shrink to almost nothing. To sweeten the deal, the Liberals will send three cheques worth up to $900 to each Ontario household. That shows just how important this tax shift is to Big Business.

Besides bailing out corporations on the backs of working people through the imposition of the HST, the economic update announced that the Treasury Board/Management Board of Cabinet would "conduct a rigorous strategic spending review focused on high impact areas to ensure continued relevance and effectiveness of government programs and services and the way they are funded." Like Barack Obama's stated plan to appoint a committee charged with eliminating "wasteful spending" in government programs, this is a lot of flowery language designed to obscure the fact that social programs will be facing drastic cuts. In tough economic times, it is always workers - the lower and middle classes - who are asked to tighten their belts.

In addition, the Toronto Star is reporting that McGuinty has floated the idea of resurrecting the "Rae Days" of the 1990s. These forced, unpaid days off for public sector workers - "Dalton Days" this time around - are painted as necessary to pay off the province's $24.7 billion deficit, but it's clear that the move is a political ploy designed to pit workers against each other while deflecting attention from the Liberals' unabashedly neoliberal approach to the recession: more corporate tax cuts.

McGuinty's gall is infuriating. He directs widespread anger among Canadians to public sector workers, who he claims have been "sheltered" from the recession. It's not fair, McGuinty goes on, that private-sector workers are feeling the pinch while public-sector workers "clearly" are not. Representatives from the Ontario Federation of Labour, Ontario Nurses' Association and other public sector unions beg to disagree, but what's most notable in McGuinty's interpretation is his kneejerk hostility to the public sector and his kowtowing before the private sector, specifically the leaders of Big Business.

If public sector workers really were "sheltered" from the recession, McGuinty should have taken this as an indication of the need for even greater employment opportunities in the public sector, combined with increased stimulus spending by the government and a rash of good old-fashioned Keynesian public works projects. But after 30 years of economic policy dictated by a neoliberal fixation on fiscal conservatism and corporate tax cuts, such a people-centred approach is apparently off the table for the Liberal government, which prefers to soak the working class. A certain opposition leader hit the proverbial nail on the head:

NDP Leader Andrea Horwath said "it does not make any sense" to be considering such draconian measures at the same time as billions in corporate tax cuts are on the horizon for Bay Street.

So when's the next election?