TORONTO, Jan. 10, 2012 /CNW/ - The Ontario Nurses' Association (ONA) is
today releasing a new research paper that provides an alternate reading
of Ontario's macroeconomic situation and people-oriented solutions.
ONA staff economist Salimah Valiani's analysis makes calculations based
on government data demonstrating that Ontario's finances are not as
tight as is currently being discussed. Compared to several countries,
Ontario has relatively small deficit-to-GDP and debt-to-GDP ratios -
true markers of economic health.
"Our economist's findings are quite striking and call into question
exactly what actions should be taken to eliminate the province's
deficit," says ONA President Linda Haslam-Stroud, RN. "The research
paper also examines what other countries are doing to ensure they
emerge from the worldwide economic downturn stronger and ready for the
future, and how the drastic measures taken in Greece have further
worsened that country's economy while devastating public services."
The paper, entitled Fixing the Fiscal House: Alternative macroeconomic
solutions for Ontario, shows that Ontario is suffering from a
structural deficit largely due to low taxation of corporations and
high-income individuals. Government data on production and profit rates
in Ontario from the late-1990s on show that the link between low
corporate tax rates and increased job creation is simplistic and
"During a period of reduced taxation, our economy has experienced
falling or stagnant production levels, falling employment and healthy
profits for corporations," says Haslam-Stroud. "Tax cuts have created
more wealth for the wealthy and intensified work for the majority of
Ontarians - and registered nurses are a prime example of work
intensification and its effects. Further reducing public-sector
spending will simply add public-sector workers to the growing numbers
of unemployed private-sector workers. This in turn will reduce domestic
consumption and delay economic recovery - hardly the ideal future for
The paper elaborates on stimulus measures adopted in China and Brazil -
including public health care expansion - aimed at increasing domestic
consumption, employment and improving the well being of residents
during trying world economic times.
ONA will provide the paper and its economic analysis to the provincial
government and is also presenting its findings at the Commission on
Quality Public Services and Tax Fairness town hall meetings across the
province. The paper is available on ONA's website.
"Ontario's registered nurses and allied health professionals have seen
the effects of budget constraints on patient care, and they've
experienced the intensification of work and the health effects on their
colleagues," notes Haslam-Stroud. "Ontario must ensure that it
addresses its structural deficit at the root, rather than further
cutting health care quality and the prospects of full economic recovery
for the province."
ONA is the union representing 57,000 front-line RNs and allied health
professionals and more than 13,000 nursing student affiliates providing
care in Ontario hospitals, long-term care facilities, public health,
the community, industry and clinics.
Ontario Nurses' Association
Fixing the Fiscal House:
Alternative macroeconomic solutions for Ontario
About Today's Ontario Economy:
On debt-to-GDP ratios - the real test of fiscal health:
In Ontario, the debt-to-GDP ratio in fiscal year 2010 was 35.4 per cent.
(2011 Ontario Budget Papers, p. 292) This compares with debt-to-GDP
ratios for fiscal 2010 of 32.2 per cent for Canada, 41.1 per cent for
the USA, 58.7 per cent for Germany, and 109.5 per cent for Greece.
In the Maastricht Treaty - the agreement aiming to bring European
countries into an integrated political-economic union - the debt-to-GDP
ratio member countries are required to meet is 60 per cent (assuming
there is growth in the economy). Using this figure as a basis to
determine whether there is order in the various fiscal houses listed
above, two points stand out: 1) More than half of these fiscal houses
are in order, but are undergoing public spending cuts of a "pound of
flesh" nature… This has been justified by governments and parties of
all political shades on the basis that governments must protect credit
ratings as determined by Moody's and other credit rating agencies and
that GDP growth has been either low or negative….
On the Greek government's revenue base:
Between 1996 and 2006, total revenues of the Greek state amounted to an
average of 37.9 per cent of GDP. This compares with state revenues of
54 per cent of total GDP in Sweden and an average state revenue of 45.3
per cent of GDP in the 15 countries of the Euro zone (known as the
EU-15). As a result, public social spending in Greece - for example on
pensions, health care, home care, education, social services - amounts
to a smaller percentage of Gross National Product (GNP) than in the
EU-15. Whereas in the EU-15, average public social expenditures amount
to 27 per cent of GNP, in Greece they account for 25.9 per cent.
The principal reason why Greek state revenues and, in turn, public
social spending are relatively low is that taxation of the wealthy in
Greece is minimal to non-existent. More specifically, a range of
business activities are tax exempt including profits earned on the sale
of stocks, income earned in the shipping industry and capital gains
made on family business sales.
Additionally, while the nominal tax rate for corporations in Greece is
25 per cent (in line with the OECD average of 25.7 per cent), the real
corporate tax rate is far below the EU average due to rampant corporate
tax evasion as well as inconsistent value-added tax collection by the
On the Ontario government's revenue base:
Between fiscal year 1998 and fiscal year 2003, through a combination of
corporate and other income tax cuts, the Ontario government eliminated
61.9 billion CAD from its revenue base. The upcoming proposed corporate
tax cut (following from a reduction of 2.5 per cent between 2009 and
2010) will reduce the Ontario corporate tax rate from 11.5 to 10 per
cent. This is estimated to amount to a further loss of fiscal capacity
of 2.5 billion CAD by the end of fiscal year 2012.
Even a successful, two-year public sector compensation freeze, as called
for by the Ontario government in July 2010 - contrary to the collective
bargaining rights sanctified in the Canadian Charter of Rights and
Freedoms - would not make up for this 2.5 billion CAD loss of fiscal
As estimated by economist Hugh Mackenzie, a two-year public sector wage
freeze would amount to 1.7 billion, assuming a four per cent rate of
inflation. (Mackenzie: 2011, 7) As estimated by MPP Hudak, a two-year
wage freeze would amount to a "savings" of 2 billion CAD.
On reduced corporate taxes and job creation in Ontario:
…in the period of reduced taxation, the Ontario economy has undergone
falling or stagnant production levels, falling employment, and healthy
profit rates. Rather than increased employment and production, the
outcomes of reduced taxes on corporations and the wealthy are
increasing wealth for the wealthy and work intensification for the
On Ontario's deficit-to-GDP ratio:
Currently Ontario's deficit stands at three per cent of real GDP. In
other words, using government projections of a deficit of 16 billion
CAD and real GDP of 533 billion CAD for 2011-12, the amount of
shortfall in the current budget will be worth three per cent of total
goods and services produced within Ontario by the end of March, 2012.
This is not a large shortfall.
On Ontario's public sector:
…the risk facing Ontario is not that the deficit will persist at its
current level, but rather that cost-cutting measures will be adopted
causing the "choking off" of economic recovery and long-term damage to
Ontario's public services.
… through public infrastructure investment in the past seven years…the
Liberal government has made a mere beginning in reversing the damage
caused by the policies of the Harris government in the 1990s…Only in
2008 did the average real wage of public-sector workers return to the
level of value of average public sector wages in 1992.
On alternative macroeconomic solutions:
Given the weak employment figures in Ontario's private sector presented
in Section B, and the importance of building domestic demand within a
context of decreasing exports (particularly to the USA), it would be
beneficial to all residents of Ontario for the Ontario government to
invest in public service expansion to increase overall employment and
fuel domestic consumption.
Public investment in new social programs to increase the well-being of
residents of Ontario will help rebuild the economy by making the entire
population more resilient and the working-age population more
productive within a trying global economic context.
Though little discussed in Canada and other rich countries, such an
approach is being undertaken in certain countries. Partly as a result,
countries like China and Brazil are doing far better in weathering the
global economic downturn. In 2009, at the onset of the global economic
crisis, China invested 21.7 billion yuan renmimbi (RMB), or 3.4 billion
USD in "grassroots" public health care - part of its 4,000 billion RMB
(632.5 billion USD) economic stimulus plan aimed to subvert decreasing
demand for exports by building domestic demand.
Health Care and Registered Nurses in Ontario
On public social spending:
While the average ratio of public social spending to GDP is 27 per cent
in the EU-15, it is 22.1 per cent in Spain and Ireland, 24.3 per cent
in Portugal, and 25.6 per cent in Greece. Similarly Ontario, on the
path of decreasing tax rates for corporations and the wealthy - a path
initiated by the Conservative government but continued by the Liberal
government - has seen a significant decrease in the state revenue base
and this has fed into positioning Ontario as the third province from
the bottom in terms of public social spending.
On the consequences for health care:
Taking the sphere of health care, an area of public spending of vital
importance to most residents of Ontario, this relatively low level of
social spending is experienced in various ways. To mention a few
examples: the shortage of long-term care beds and adequate home care
services for the elderly, the lack of hospitals in rural areas and the
North, and inadequate maternal and infant health care throughout the
province. In terms of hospital care on the whole, Ontario government
expenditure per capita is lower than that of all provincial governments
other than Québec.
On the consequences for front line RNs:
In Ontario, the ratio of direct-care RNs to population in 2009 was 644
to 100,000 population. In the rest of Canada in 2009, the average ratio
of direct care RNs to population was 785 to 100,000. The significantly
lower RN to population ratio in Ontario is a direct result of
inadequate financing for front-line RN positions in hospitals and
inadequate hiring and retention of RNs in non-hospital health care
operations such as long-term care homes.
… Inadequate financing of RN positions in Ontario hospitals and
government refusal to mandate RN care hours in non-hospital health care
operations continue despite numerous studies demonstrating that patient
outcomes improve when the proportion of care hours provided by RNs is
…One consequence of the shortage of full-time RN positions and
inadequate retention of RNs is the high number of overtime hours worked
by nurses in Ontario...In 2008, RN absenteeism due to illness and
disability in Ontario was 8.8 per cent, up from 4.2 per cent in 1987.
…tendency to search for cost saving methods in health care delivery
which often lead to harmful effects on those delivering or/and
receiving the care. One instance from the Hemodialysis Unit of the
Peterborough Regional Health Centre… from the summer of 2010, RNs were
replaced by lesser trained, registered practical nurses… for the
purpose of achieving a cost saving of 200,000 CAD. The recommendation
was implemented by the Health Centre despite the fact that ONA RNs of
the Hemodialysis Unit had formally identified a problem of short
staffing to the Health Centre in 2009, citing that in addition to the
shortage of RNs, the Unit was treating an increasing number of
patients, an increasing proportion of which were of higher acuity
…Since the onset of the global economic crisis, the situation of RNs has
become yet more grave in Ontario. Between April 2009 and August 2011,
2,550 RN positions were eliminated throughout the province…The current
round of health worker layoffs translates into further intensification
of work for those workers not laid-off… for those RNs still employed,
it means more patients per RN, less RN time per patient, more paid and
unpaid overtime, more stress for workers, and likely, more illness and
SOURCE Ontario Nurses' Association
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