Mar. 31, 2010 - Issue #754: Don Juan
Social prosperity creates strong economy
The Alberta College of Social Workers (ACSW) has released a social policy framework (SPF), prepared by the Parkland Institute, which reveals growing economic disparity in Alberta. The framework calls on the government to address this disparity and offers several recommendations, including investment in the public sector and stable funding for the non-profit sector. In 2008, Nova Scotia put in place a social prosperity framework due to the province's recognition of the link between social and economic prosperity and the need to plan for both.
Lynn Hartwell, executive director of policy and information management of Nova Scotia's Department of Community Services, explained that when Nova Scotia created an economic planning document in 2006, it became clear that a social planning document was necessary.
"While the economy can drive investment in social programs, social prosperity is really the basis of a strong economy," Hartwell said. "The model is based on the premise that the more you invest in people, the more people will be able to attach to the work force and their community, and they are going to create more social and economic benefits."
Rather than cut funding to public services, Bob Johnson, president of the ACSW, and Diana Gibson, research director at the Parkland Institute, explained that investment in the public sector will improve the quality of life for Albertans and help stabilize the boom and bust economy.
In February of this year, Alberta was the only province in Canada to continue to lose a significant amount of jobs—over 14 800. Investment in the public service would be a major step toward reducing this trend.
"The best way to create jobs in this recession is direct government spending," said Gibson. "Public sector employment is the best bang for your buck on stimulus because it's money spent today on jobs today in local communities for middle-income workers who are spending locally. The least effective way to create jobs is what we've been doing: handing off [tax revenues] to large corporations and the top income bracket."
In many cases, where government has cut services, the non-profit sector has stepped in to fill the gaps. "[Non-profit] organizations are faced with providing a lot of the services that the public service used to provide," explained Johnson. This is problematic because the funding organizations receive has not increased to match the increase in demand for services.
Johnson pointed out that employees in the non-profit sector make considerably less than their public sector counterparts. What were once well-paying, secure and often unionized jobs in the public sector are now lower paying, often contract-based and rarely unionized jobs in the non-profit sector. The report calls for stable, non-competitive funding that would allow non-profits to meet service demands and pay their employees a wage comparable to the public sector.
The policies proposed would create a broader tax base, reducing Alberta's dependence on oil and gas revenues and stabilizing the economy. Gibson used Norway as an example, explaining that, unlike Alberta, the country has a wide tax base, and oil and gas revenues are not tied to its social spending. This mitigated the effects of the recession and allowed the country to maintain stability in delivering social services.
Hartwell is adamant as to the positive effects a social policy framework had on Nova Scotia's economy: "Having more people in the workforce at higher value jobs means they are paying more tax, and if they're paying more tax we're able to get more people in the workforce. You can't have a strong economy without workers and citizens engaged in their communities, and they don't have the ability to do that unless they have jobs and the supports they need."
While Nova Scotia's SPF is silent on the method of delivery—whether it is to be done publicly, privately or through nonprofits—it is clear in stating that these services are essential for a strong economy.
Implementing the social policy framework proposed by the ACSW would bring many of the same benefits to Alberta. If the recommendations of the SPF are followed, Gibson suggested, "You actually will see businesses grow as a result of more demand created by middle- and low-income families as they have more disposable income."
Gibson challenged the pattern of economists saying during good times that cutting taxes for the wealthy creates jobs, then saying during a recession that this strategy doesn't create enough jobs: "If it doesn't create enough jobs in a recession, it doesn't create enough jobs in a boom."
She also pointed out that during this recession mainstream economists from the Conference Board of Canada to the International Monetary Fund have advised against stimulus in the form of tax cuts to the wealthy because it does not create enough jobs, stating, "if money is put in the hands of middle- and low-income workers, they're going to spend it today on goods and services that create jobs in local communities." V
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