Academic journal article Canadian Review of Social Policy

Equity in Times of Austerity: Ontario's Revenue Crisis in Historical Perspective

Academic journal article Canadian Review of Social Policy

Equity in Times of Austerity: Ontario's Revenue Crisis in Historical Perspective

Article excerpt

Introduction

Concerns for health equity have found entry into social policy discussions in Canada at both the national and provincial levels of government. The concept of health equity focuses attention on the distribution of resources and processes that drive systematic inequality in health status between more and less advantaged social groups (Braveman & Gruskin, 2003). There is a growing consensus that a central element of any strategy to reduce existing health inequities must focus on improving the distribution of social determinants of health (SDHs), such as adequate housing and income, secure employment opportunities, affordable education and health care and other social protection measures in which government programs play a central role (Raphael, 2013). Ontario, Canada's most populous province, is notionally committed to reducing health inequities, and before the onset of the global financial crisis in 2008 was in the process of improving social protection measures. However, in the wake of the crisis and the deep recession that followed it, Ontario has come under immense pressure to return to a balanced budget and initiated cut backs in social service provision.

In light of persistent deficits, historically high debt, and the precarious state of the global economy, the government's recently commissioned report on the reform of Ontario's public services recommended substantial cuts to the rate of government spending (Commission on the Reform of Ontario's Public Services, 2012). Such cuts, especially in areas such as housing, social assistance and employment, will have negative health equity implications as they disproportionately affect many social determinants of health affecting citizens in the bottom half of the socioeconomic gradient (Commission on Social Determinants of Health, 2008b; Ruckert, 2012), who have already seen their income share of economic growth fall in both absolute and relative terms since the mid-1990s (Yalnizyan & Schrecker, 2010). Although the Ontario government recently acknowledged the need to re-examine various revenue tools, to date, there has been little historical analysis of the structural changes made to revenue sources or acknowledgment of the need to re-examine the revenue side of government activity in addressing fiscal imbalances (noting that increasing taxation was explicitly excluded from the mandate of the 2012 Ontario government report on reform of public services).

This article begins with a discussion of how Ontario's revenue decline is part of a larger macrostructural process of transformation, the globalization of the world economy and the ascendancy of neoliberal policy solutions. It next interrogates changes to the Ontario taxation system, especially during the deepening of neoliberal policies in the province (post 1990), to provide historical context to the current state of the provincial treasury. It focuses particularly on income, sales, and corporate income tax, which comprise the majority of revenue generated through taxation. The decline in government revenue is then linked to three key pathways affecting the distribution of social determinants of health: social assistance, labour market policy, and housing investments. We conclude by suggesting that, if policy-makers are serious about promoting health equity, new revenue streams will have to be found, and austerity measures will need to be abandoned in favour of more equitable revenue generation. To this end, we briefly probe the plausibility of alternative tax structure scenarios and their potential for financing social programs that address health equity. We finally propose some alternative social policy and program options that could contribute to rebuilding the welfare state in Ontario, with directly beneficial consequences for health equity.

Ontario's Revenues in Global Context

Globalization and Public Revenue Decline

The decline in the Ontario government's revenue is located within the dominance of a neoliberal economic orthodoxy that has driven much of the processes of global economic integration over the past three decades (Labonté, Schrecker, Packer, & Runnels, 2009). …

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