02 February 2015

Making the rich richer #nlpoli

Politics in Newfoundland and Labrador – Part 1
The plan to cut public representation in the House of Assembly has drawn public attention to more than just the plan to reduce the number of elected representatives in the legislature by eight.   

In this new series,  SRBP will examine politics in Newfoundland over the last 15 to 20 years  The first  instalment  - “Making the rich richer” – and the second – “One Big Party” - look at the curious agreement among the parties on major public issues. 
The provincial government subsidises tuition fees at Memorial University for Canadian undergraduate students. They go to school for fees far less than the cost of providing the buildings, technology, and instructors need to educate them.

The annual cost of the tuition subsidy is about $40 million, according to the most recent report by the province’s auditor general.  That’s part of about $388 million the provincial government provides to the university to fund its operations.

All three political parties support the subsidy. The Liberals started it and the Conservatives continued it. The New Democrats back it enthusiastically.

The tuition subsidy benefits Newfoundlanders and Labradorians primarily.  Over the past five years or so,  Memorial has been able to attract growing numbers of students from outside the province.  They come for the cheap education, not the quality of the education, although there’s no reason to believe that Memorial University provides a substandard education to anyone.  So lots of people benefit from the subsidy, many of them from outside Newfoundland and Labrador.

The tuition subsidy costs about 20 times what the cuts to the House of Assembly will theoretically save annually.

The tuition doesn’t make university education more accessible to students from low and fixed income backgrounds, although proponents of the subsidy will say that it does.

Based on research and experience in other places,  the subsidy benefits people from the middle and upper classes.  Their children are more likely to go to university anyway and they can,  generally speaking, better afford to cover the cost of university education than people on low and fixed incomes.

A study of tuition fees across Canada by the Frontier Institute for Public Policy found some interesting results.
  • The data show that university participation for 23 year olds from low-income families was lower in Quebec and Newfoundland, the two lowest-tuition provinces, than in any other province.
  • Manitoba, the remaining low-tuition province, had a low-income participation rate that was nearly identical with the
    national average.
  • Nova Scotia, with the highest average tuition fees in the country, boasted the highest university participation rate for
    students from low-income families.
  • Ontario, with the second-highest tuition fees in the country, had the second highest participation rate for young people from low-income families.
What’s interesting for our purposes is that all three political parties support the policy enthusiastically.  Even the provincial political party that officially espouses social democracy supports a policy that fundamentally favours the well-to-do.

It’s like a proposal from the New Democrats to remove provincial sales tax from home heating fuels. In 2011, the provincial Conservatives adopted the plan.  Finance minister Tom Marshall had an interesting explanation for the government’s decision in 2011.  As CBC reported, Marshall said: "Oil prices are high and it appears that these prices are going to be sustained at high prices. So we felt it was time to give back."

The provincial New Democrats hailed this as a great victory for “the people” of Newfoundland and Labrador Lorraine Michael, the lone New Democrat in the House at the time, praised her victory over what she called an “unjust and immoral tax.”

“The removal of this unjust tax,” said Michael, “is the least government can do with the unprecedented revenue our province is receiving from offshore revenues and a projected cost per barrel of oil of $108 a barrel.”

In a textbook explanation of political parties, the Conservatives and the New Democrats should be polar opposites on most things.  They are supposed to be ideological opposites.  People typically put the Liberals somewhere in the middle, shifting from the left to the right as things might be at any given time.

And yet, in Newfoundland and Labrador, the two supposedly opposite parties share not only the same parties but they share exactly the same explanations for why the policies are good. Lorraine Michael could have been reading from Tom Marshall’s speaking notes with her reference to the price of a barrel of oil.  Her remarks blended neatly with Tom Marshall’s reference to the need for government to “give back” to people the benefit of oil royalties.

People on fixed and low incomes certainly benefited from the cut in taxes.  But the tax cut gave the most benefit to people in the middle and upper income brackets all of whom could afford to pay the tax on heating fuel.  In many cases, their incomes already supported large homes that consumed large amounts of heating fuel. 

They also drive large vehicles that guzzle gas. The New Democrats are keen to help them there as well.  In their 2011 campaign platform, the party wanted to chop the provincial tax on gasoline. They didn’t really care about the environmental consequences of their policy or the fact that it disproportionately benefitted the better-off people in the province. 

You must admit:  it’s a bizarre place where the social democratic party and the conservative party agree on schemes to redistribute public wealth to the better-off members of society.

Well, that’s politics in Newfoundland and Labrador.

Tuesday:  One Big Party