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New Brunswick's Dark Future Looms Across the Pond

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In times of deep recession, when people are out of work, or in threat of losing their jobs, when the middle-class is under siege, and when the ranks of the poor are growing, government has an obligation to help -- in the form of stimulus spending to promote employment, working with the private sector to promote job creation, and promoting poverty reduction, and social inclusion.

This is not only morally right, it makes fiscal and economic sense by promoting consumer spending and social inclusion.

In these respects, the government of Prime Minister David Cameron in the United Kingdom is serving as an example of how not to govern during a recession, through a focus on draconian measures to cut spending and deficits at the expense of job creation, and social welfare. Fiscal responsibility is important, but when faced with severe economic downturn, it should not come at the expense of jobs, or helping the poor.

The consequences of Cameron's approach have been dire for Britain, which has officially entered a double-dip recession -- with GDP contraction for two consecutive quarters coming shortly after the country's initial recessionary downturn in 2009. The opposition Labour party's shadow chancellor has criticized the government's policies for plunging the country back into recession, stating that "we consistently warned that their austerity plan was self-defeating, and that cutting spending and raising taxes too far and too fast would badly backfire."

This prediction has turned out to be true.

In addition to the economic numbers, evidence of Britain's dire economic situation has also been seen in foodbank use. According to the Trussell Trust -- the leading foodbank network in the country -- the number of food parcels handed out has doubled over the last year, and is set to increase because of a rise in living costs happening alongside declining incomes, and cuts to welfare payments.

The Executive Chair of Trussell Trust, Chris Mould, stated that there has also been a notable increase in the number of repeat customers at foodbanks (as opposed to one-time users) and that: "foodbanks are seeing people from all walks of life turning to us for help when they hit crisis."

Where the last Labour governments of Tony Blair, and Gordon Brown had a comprehensive poverty-reduction program aimed at promoting social inclusion, the actions of the current Cameron government in cutting welfare payments, and neglecting job creation are serving to roll back successes in combating poverty, and making for an increasingly worse situation for both the poor, and those in threat of falling into poverty.

By contrast, the United States has been faring better than Britain, with 2.5 per cent economic growth during the first quarter of 2012. While there have been some nods to fiscal austerity, the priority of the Obama administration has been job creation -- with a stimulus program aimed at providing jobs, and jump-starting consumer spending, and the "bailing out" of the automobile industry which, while heavily criticized at the time, has saved GM and Chrysler, major employers in Michigan, and in turn saved jobs. Furthermore, President Obama has promoted a jobs bill in Congress.

Europe has traditionally been the progressive example of the social welfare state. By contrast, the United States, with its minimalist welfare state, lack of a comprehensive public healthcare system, and stridently ideological right wing movement, has seemed the antithesis of progressive social policy. However, in managing the economy during recession, and focussing on job creation, the United States under President Obama has served as a positive progressive example.

Closer to home, what can we here in New Brunswick learn from this?

Faced with a recessionary environment, the most recent Progressive Conservative budget has expressly stated that jobs will be lost and, by extension, that job creation is not a priority. Meanwhile, the poverty-reduction program of the last Liberal government has been rolled back.

None of these policies bode well for New Brunswick's long-term economic health. New Brunswick, which was arguably in a state of semi-permanent recession well before 2008, has seen unemployment climb to 10.2 per cent and seen 5,700 jobs lost in March according to figures from Statistics Canada. The Deputy Premier stated to the CBC that these numbers were the result of market forces beyond the government's control. However, government can play a role.

The last Liberal government responded to the 2008 recession with a stimulus program and New Brunswick, a traditionally "have-not" province, had unemployment rates below the Canadian rate, for a period of time. Currently, Liberal MLA Roger Melanson has called for a jobs summit of relevant stakeholders to address what is an emergency situation in New Brunswick, with job losses increasing pressure on many in the province, including young people who feel the pull to find work elsewhere.

Solutions like pushing forward recklessly on fracking are not the answer. The environmental costs of contaminated air and water would likely outweigh any potential economic benefits. Especially concerning is the government's lack of real consultation with groups that have raised concerns about fracking -- with statements that "listening" to physicians, or meeting with the Conservation Council amounts to real consultation (much less actually listening to and accounting for concerns raised).

In Britain we are seeing the consequences of a government that neglects job creation, and social welfare during times of recession. Given New Brunswick's already fragile economy, the consequences for our province of a similar approach are all the more concerning.