🚀 go-pugleaf

> Part I
> 
> Employment and Personal Security: The 5-R Jobs Plan
> 
> The best personal security is a good job with a good income. That is
> the fundamental reason for the 5-R Jobs Plan.
> 
> The plan is grounded in the idea that the private sector - not
> government - is the primary agent for job creation. We propose to
> remove government interference in the economy where it unduly hampers
> the ability of the private sector to create jobs.
> 
> The 5-R Jobs Plan embraces the following principles:
> 
>   1. Reduce and eliminate the federal debt and deficits. High real
>      interest rates are a key obstacle to private sector investment in
>      job-creating activities. The primary role of governments,
>      therefore, is to drive down real interest rates by eliminating
>      the federal deficit and reducing the size of the national debt
> 
>   2. Relieve Canadians of their oppressive tax burden. High taxes
>      threaten job creation by reducing the incentive to individuals
>      and investors for productive work and job-creating activities
> 
>   3. Restore labor market efficiency and reduce social program
>      dependency. High levels of Canadian social assistance have played
>      a significant role in increasing unemployment in Canada. These
>      programs trap Canadians in dependency and produce disincentives
>      to work
> 
>   4. Remove barriers to internal and external trade. Freer
>      interprovincial and international trade will increase our
>      competitiveness and create lasting employment
> 
>   5. Renew Canada's physical and intellectual infrastructures.
>      Investments in Canada's transportation and information networks
>      will ensure that our country remains internationally competitive.
>      Intellectual infrastructure describes a well-educated,
>      well-trained work force. Education and training dollars do more
>      in the hands of individuals than in the hands of government.
> 
> The best personal security is a good job with a good income. No
> government program, handout or loan guarantee can provide the kind of
> security that privately created employment provides. The personal
> security needs of Canadians must be met first of all by enhanced job
> creation. Every government program must be evaluated on the basis of
> whether or not it enhances private sector job creation.
> 
> Conventional wisdom in Canada holds that government spending creates
> greater net employment. Over the last thirty years increasing deficits
> and a growing national debt corresponded to an unemployment rate which
> grew from around 6 percent in the 1960s to around 10 percent in the
> 1990s (see Chart 1). At the same time, federal government debt grew
> from about 15 percent of GDP to 75 percent. The message is clear:
> deficit spending by itself is no solution to unemployment.
> 
>     ------------------------------------------------------------------------
> 
> Chart 1
>     ------------------------------------------------------------------------
> 
> The Reform 5-R Jobs Plan breaks with the status quo. It relies on the
> private sector, not government, to do what it does better - create
> employment.
> 
> The five elements of the Reform Jobs Plan are:
> 
>   1. Reduce and eliminate the federal debt and deficit
>   2. Relieve Canadians of their oppressive tax burden
>   3. Restore labor market efficiency and reduce social program
>      dependency
>   4. Remove barriers to internal and external trade
>   5. Renew Canada's physical and intellectual infrastructures.
> 
> Reduce and Eliminate the Federal Debt and Deficit
> 
> Persistent government deficits and the resulting debt have seriously
> damaged the Canadian economy.[1] Economists are now virtually
> unanimous in the assessment that the current level of indebtedness in
> Canada is not only unsustainable, but actually harmful.[2] As
> evidenced by his recent "Grey Book," even the current Minister of
> Finance has come to understand the crucial connection between
> excessive deficits and debt on the one hand, and poor economic growth
> and rising unemployment on the other.
> 
> Increased deficits and debt are not the solution to unemployment. The
> first step to restoring employment is to address Canada's debt and
> deficit crisis.
> 
> Quick and Decisive Elimination of the Deficit
> 
> The Reform Party believes that the federal deficit can and must be
> eliminated over the life of this parliament.
> 
> In the C.D. Howe Institute's recently released book, Deficit
> Reduction: What Pain, What Gain? economists from across Canada
> (including the Bank of Canada and Department of Finance) discuss
> deficit reduction (sidebar). They conclude that the costs of deficit
> reduction are manageable in the short-term and pay large dividends in
> the medium to long-term.
> 
>     ------------------------------------------------------------------------
> 
> (SIDEBAR - The C.D. Howe Study: Generalized Conclusions)
>     ------------------------------------------------------------------------
> 
> 
> Rationale for Quick and Decisive Deficit Elimination
> 
>   1. Quick and decisive elimination of the deficit would immediately
>      increase investor and business confidence and lower the risk
>      premium on federal government bonds. This would lower our real
>      interest rates, the highest in the industrialized world. Lowering
>      our real interest rates would increase investment in Canada and
>      thereby create employment
> 
>   2. An economy with a $750 billion GDP could withstand an annual $8-9
>      billion (1 percent of GDP) reduction in federal government
>      expenditures as called for by the Reform plan
> 
>   3. Now is the best time to do it. A window of opportunity is open as
>      our economy experiences strong growth sufficient to cushion the
>      impact of deficit reduction. If we enter an economic downturn
>      (which economists warn could be precipitated by a U.S. slowdown
>      as early as 1997-98) without eliminating the deficit, then the
>      shock of that downturn could easily see a return to unsustainable
>      deficit levels just as it did during the recent 1990-91
>      recession[3]
> 
>   4. Even if its three-percent target is reached, the government's
>      resolve to eliminate the deficit will be weakened by an impending
>      election campaign within two years
> 
>   5. The three-percent target is lifted from the European Community's
>      Maastricht Treaty. The treaty specifies that net
>      government-deficits must fall below three percent of GDP. In
>      Canada, provincial deficits - which totalled $23 billion in 1992
>      - must be included. The treaty also specifies that net government
>      debt must fall below 60 percent of GDP. The net debt of all
>      levels of government in Canada in 1994 was about 100 percent of
>      GDP - a percentage exceeded in the industrialized world only by
>      Italy
> 
>   6. The Government of Alberta embarked upon a fiscal path which has
>      resulted in a 20-percent reduction in government spending. Yet
>      Alberta has experienced some of the highest growth rates of all
>      provinces
> 
>   7. Experiences elsewhere - the deficit-reduction experiences of the
>      Irish in 1987-89 and the Danish experiences of 1983-86 - strongly
>      suggest that deficit reduction can set the stage for significant
>      economic growth. Both experiences demonstrate that conventional
>      Keynesian analysis, which predicts severe negative effects from
>      deficit reduction, is not always borne out.[4]
> 
> Paying Down the Debt
> 
> Canada's key problem in the 1990s is not confined to the deficit but
> extends to its crippling debt. Interest payments on the debt are so
> large that they consume a significant proportion of the nation's
> taxation capacity and leave fewer and fewer tax-dollars to pay for
> government services.
> 
> In dealing with the debt, the first priority for the federal
> government is to stop its growth by eliminating the deficit. Once this
> objective is achieved and if spending remains constant, normal
> economic expansion will see revenue grow and create a budget surplus.
> When this is achieved, a national dialogue is needed to decide whether
> budget surpluses should be used to reduce the debt, to lower taxes or
> to allocate government spending to new or previously-curtailed
> programs. In this debate it will no doubt be noted that the fixed
> dollar value of the debt will claim an increasingly smaller percentage
> of Canada's GDP. The burden of debt-servicing will fall concurrently.
> At the same time, reduced taxation levels will stimulate economic
> growth and hasten debt reduction. Both debt and tax reductions offer
> Canadians the prospect of a brighter and a more prosperous future.
> 
> Relieve Canadians of their Oppressive Tax Burden
> 
> No Tax Increases to Eliminate the Deficit
> 
> A recent survey by the Canadian Chamber of Commerce reveals that one
> main obstacle to employer job-creation is excessively high taxes.[5] A
> C.D. Howe report and the latest OECD Jobs Study note that raising
> taxes sends the wrong signal to investors and discourages them from
> making new, productivity-boosting investment in Canada.[6] That the
> federal government is considering tax increases suggests that it is
> not committed to a reduction in the levels of spending and in the
> accompanying disincentives to investment and work. Domestic and
> foreign investors fear that taxes will rise even further in the future
> and dampen future growth even more. Under such conditions, the world
> simply offers too many other profitable investment alternatives for
> investors to risk further investment in Canada.
> 
> The Reform Party also opposes the elimination of the deficit via tax
> increases. Under current conditions, tax increases are unlikely to
> generate anticipated revenue growth and may even lower revenues. At
> tax rates above a certain threshold, Canadians seek out tax loopholes,
> move their capital offshore, engage in tax-avoidance or evasion, or
> merely reduce investment and entrepreneurial activity.
> 
> Tax Reform
> 
> The Reform Party proposes a fundamental reform of the entire system of
> taxation. To be undertaken once the current deficit crisis is
> eliminated, this reform anticipates the creation of a simple,
> transparent system of taxation designed to minimize administration
> costs, distortions and disincentives to work. A tax regime which would
> encourage investment, risk-taking and productivity. The principal
> features of this tax would be:
> 
>   One flat rate of tax
>   One personal exemption per individual
>   A limited number of simple deductions for individuals and
> corporations (e.g. for corporations: depreciation and
> income-averaging; for individuals: tax deductible savings (RRSP) and
> charitable donations)
>   A clear definition of income.
> 
> This regime would not become an instrument of economic and social
> engineering via the creation of tax-breaks, which are inevitably
> exploited as tax loopholes. However, its basic design permits
> exemption from tax for those with low incomes.
> 
> Restore Labour Market Efficiency And Reduce Social Program Dependency
> 
> During the postwar years it was widely believed that unemployment is
> caused by a deficiency in the economy's demand for goods and services.
> This Keynesian explanation of unemployment provided the justification
> for government deficit-spending and debt accumulation and engendered
> public acceptance of this policy.
> 
> While Keynesian theory offers an explanation of business cycle
> down-turns, it cannot explain the upward spiral in unemployment rates
> since the 1960s. If deficit-fed levels of aggregate spending in Canada
> lowered unemployment, full employment should have existed throughout
> much of the 1980s and 1990s. Different approaches to the diagnosis and
> treatment of persistently high unemployment rates are needed.
> 
> In its recent comprehensive study of employment, the OECD pointed to
> the reduced labour market flexibility created by the social policies
> of governments. This reflects the views of many economists and even
> that expressed by Canada's Auditor General in his 1994 report.[7] The
> Reform Party believes that the creation of new jobs and economic
> prosperity in Canada depends on accepting this new diagnosis of
> unemployment and rests on devising new policies to deal with it. Such
> policies would reduce unemployment and increase economic growth. They
> would also reduce the human cost which arises from chronic dependency
> on social policy programs.
> 
> In support of this diagnosis of the causes of and prescription of
> remedies to unemployment, see Chart 2, taken from the Auditor
> General's Report. It shows that since unemployment insurance was made
> more generous during the 1960s and 1970s, unemployment rates doubled
> while job vacancy rates remained nearly unchanged.
> 
> One explanation of this phenomenon is that employees no longer possess
> the necessary skills needed to fill vacancies at the rate they did
> before the 1970s. This offers only a partial explanation of the higher
> unemployment rates. The U.S. economy is subject to the same
> international influences but unemployment rates there have been
> consistently lower than in Canada since the 1970s. On the other hand,
> European countries with social programs almost as generous as those in
> Canada (the OECD singles out Canada as an outstanding example of the
> effects of generous benefit rates) experienced similar increases in
> average unemployment rates during successive business cycles.
> 
>     ------------------------------------------------------------------------
> 
> Chart 2 | Chart 3
>     ------------------------------------------------------------------------
> 
> The OECD, the Auditor General of Canada and even the Department of
> Finance point to the role which income support programs have played in
> the rise of Canada's unemployment rate. Their view is supported by
> reference to the generosity of Canada's unemployment insurance
> benefits relative to those available in other countries. Chart 3,
> taken from the Auditor General's most recent report, shows clearly
> that UI benefits in Canada in recent years were twice as generous as
> in other G7 countries (excluding the U.S.) and nearly five times as
> generous as in the United States.
> 
> The OECD Jobs Study draws a direct connection between levels of social
> benefits and unemployment rates:
> 
>      There is considerable evidence that [UI and Welfare] benefits
>      affect unemployment rates. Countries which currently have high
>      unemployment and significantly reduce benefit disincentives may
>      experience a considerable improvement in their unemployment
>      situation within a few years; and conversely, countries with high
>      entitlements which do not reduce them may find that other
>      policies are not enough. In the long term, if unemployment is to
>      be kept low, it is vital to limit entitlements to benefit and
>      refuse benefits to people who are available for work, and give
>      employers and local governments incentives to tackle employment
>      problems.[8]
> 
> Defining Solutions: Social Program Adjustments
> 
> The Reform Party agrees with this analysis of the causes of
> unemployment in Canada. We agree that fundamental reforms to existing
> social programs are required in order to restore the efficiency and
> flexibility of labour markets and to restore the dignity many
> Canadians lose when they become dependent on government support.
> 
> Although the details of such longer-run reforms of the social programs
> still have to be worked out, some are outlined in part IV below. These
> reforms will maintain benefits for those genuinely unable to work
> because of physical or mental handicap or age while reducing benefits
> and making eligibility more difficult for others. Benefit levels may
> be expressed as a fraction of provincial minimum wages taking into
> account the age of claimants. Eligibility may be dependent upon the
> willingness of people to move to where jobs exist and upon enrolment
> in retraining programs.
> 
> Reform policies will be designed to protect those in genuine need. But
> those able to work who have become unemployed will be asked to rely
> more on their own and their families' resources and to make greater
> personal efforts to become employable and to find employment. At the
> same time these policies will boost economic growth, lower government
> spending and deficits, expand the job pool, and increase the
> productivity of labour and capital to the benefit of all Canadians. Of
> equal importance (as emphasized by the Auditor General), these
> policies will encourage independence among those who have been induced
> by the generosity of the system to become dependent.
> 
> Remove Barriers to Internal and International Trade
> 
> Traditionally, the focus of trade policy among Canada's provinces and
> international partners was to guarantee the highest prices to
> producers in the hope that this would result in higher employment.
> This mistaken belief resulted in high subsidies to industries such as
> dairy and poultry and in restrictions on imports of lower-priced
> goods.[9] While such policies brought some protection for certain
> industries, it came at the cost of higher prices for consumers,
> internationally uncompetitive industries and restrictions on Canadian
> exports.
> 
> Canada's trade policy must shift from protecting producers to ensuring
> not only that consumers enjoy the lowest prices, but that goods
> produced in Canada for which we have a competitive advantage gain
> access to international markets.
> 
> Removing Interprovincial Trade Barriers
> 
> While limited progress has been made in dismantling interprovincial
> trade barriers, some provincial governments continue to insist that
> they must protect the viability of uncompetitive industries at the
> cost of high prices to consumers. The result is that trade barriers
> between the provinces directly cost Canada's economy around $6 billion
> per year, while some estimates peg the total annual cost to the
> economy, including indirect and secondary costs, as high as $44
> billion (9.5 percent of GDP).[10]
> 
> The federal government can set the agenda for eliminating internal
> trade barriers. Ottawa should introduce trade dispute resolution
> mechanisms between provinces similar to those existing in the
> Canada-US Free Trade Agreement. Quick progress on elimination of these
> barriers would expose Canadian industry to the discipline of more
> competition. Consumers would not pay more for goods and services than
> they should.
> 
> The economic record shows that eliminating barriers results in higher
> employment and increased productivity. While some adjustment costs are
> inevitable, the resultant growth in trade within the country will
> result in higher real incomes and reduced unemployment.[11]
> 
> Expanding International Trade
> 
> The current government apparently recognizes the benefits of increased
> global trade and is moving to enhance Canada's North-South trading
> alliances with an expansion of the North American Free Trade
> Agreement.[12] The Reform Party supports the expansion of free trade
> in order to guarantee access to larger markets for competitive
> Canadian goods and for Canadian consumers.
> 
> In addition, the latest General Agreement on Tariffs and Trade (GATT)
> promises significant benefits for most areas of Canada's agricultural
> sector. The net payoff to Canada - even taking into account
> transitional costs and economic relocation - will be higher economic
> growth and employment. The Reform Party is committed to phased
> reductions in subsidies to producers in order to better manage the
> transition necessary for expanded international trade.
> 
> Increasingly, Canada's trade relationships are less "east-west" and
> more "north-south." Currently, 80 percent of Canada's trade is with
> the United States. This contributes significantly to our national
> income. While it may be argued that Canada's dependence on the U.S.
> economy grew over the past few decades, it is also true that huge
> market opportunities opened up in the U.S. for Canadian products. The
> exposure to American competition encourages Canadian products to be
> globally competitive. Learning the discipline of trade with the U.S.
> is a stepping stone to other international markets.
> 
> Continued expansion of north-south trade also holds implications for
> Canadian infrastructure and regional development. Increased trade
> between the Atlantic provinces and their neighbors to the south would
> provide economic and employment opportunities in the region. To
> encourage the establishment of these trading relationships, Canada
> must reorient its infrastructure so that immense trading opportunities
> do not go unexploited by Canadian traders.
> 
> Renew Canada's Physical and Intellectual Infrastructures
> 
> Infrastructure is a legitimate venue for public investment in future
> economic growth. This is one of the few areas where government
> involvement offers some prospect of real future return. Governments in
> Canada must take action to rebuild two types of infrastructure -
> physical and intellectual (or human) infrastructure - in order to
> create a better climate for private sector job growth.
> 
> Physical Infrastructure: Transportation Networks and the Information
> Highway
> 
> Legitimate physical infrastructure includes highly-developed
> transportation and communication networks. These contribute to a
> nation's competitiveness. If Canadian highways, airports and
> information transmission systems fall below the standards of other
> countries, the ability of Canadian industry to compete in the global
> marketplace is hampered and jobs are lost.
>