According to progressive economist Erin Weir, in the near future, any major cuts to public spending in Canada are likely to happen at the provincial level, rather than being imposed by our resident dictator prime minister and his cronies.

The federal government spends money on three things: transfers to individuals (Old Age Security, Employment Insurance and child benefits), transfers to provincial governments, and federally-delivered services. The Conservatives have pledged not to cut either type of transfer.

I see no reason to be sanguine about those “transfers to individuals” — EI, for example, has been systematically gutted over the years — but let’s assume for the sake of argument that the Conservatives keep their pledge and Erin Weir’s analysis holds true on this point.

In 2008-09, the last complete fiscal year, the federal government spent $108.1 billion on major transfer programs, $30.2 billion on transfers through other programs, and $69.6 billion on federal departments and agencies. If all transfers are untouchable, then only one-third of federal expenditures are eligible for cuts (i.e. $69.6 / $207.9 = 33%).

Out of that third, National Defence was $18.8 billion and Public Safety was $8.9 billion. If anything, the Conservatives would like to spend more in these areas.

These “untouchable” ministries so dear to Stephen Harper’s Conservatives are, of course, the ministries responsible for occupying foreign countries, handing over Afghan prisoners to be tortured, using security certificates to imprison Canadian residents indefinitely on the basis of secret evidence (a practice which remains legal in Canada despite recent court victories for Adil Charkaoui and Hassan Almrei), and protecting Canada from Teh Gay. But I digress.

The Canada Revenue Agency was $7.1 billion and the Treasury Board was $2.2 billion. These entities are presumably indispensable in collecting taxes and managing expenditures. Crown-corporation expenses were $8.1 billion, funding needed to deliver the mail, insure mortgages and generate Crown-corporation revenues.

Excluding these expenditures leaves only $24.5 billion from which the Conservatives could realistically cut. To put that number in perspective, it is less than half of this year’s deficit, about half of the deficit projected for 2010-11, and a few billion below the deficit projected for 2011-12. So even if the Conservatives completely eliminated the federal departments of Agriculture, Environment, Fisheries, Foreign Affairs, Health, Human Resources, Indian Affairs, Industry, Justice, Natural Resources and Public Works, they would still not save enough to balance the budget next year or even the year after that. [...]

Therefore, I tend to believe that the federal government will just try to restrict spending growth and wait for revenues to recover along with the economy. As Carl Sonnen suggested to Straight Goods, the real and imminent threat of cutbacks is from provincial governments.

Here in BC, I’m not sure what’s left to cut. During the last provincial election, the BC Liberals insisted that the deficit would not exceed $495 million. Then, as soon as the election was over, they released a budget that showed a record $2.8 billion deficit. The result? Cuts to libraries and student aid in the middle of a recession, when more people than ever need those services. An 81% reduction in arts spending (no, I’m not missing a decimal point). $8.8 million in cuts to BC’s Environmental Protection Agency. Balanced-budget requirements for health authorities which have resulted in a plethora of hard-to-track cuts to health care services. A freeze on school district budgets will have similar effects on education. A 6% increase in monthly health care fees — again, bad news for those hit hard by the recession, those on fixed incomes, and those who were already barely getting by. And that’s just since last September.

Then there’s the Olympics. Total public spending is difficult to calculate, in part because of a lack of government transparency, but also because there are plenty of projects — the Sea-to-Sky highway expansion, for example — that are only happening because of the Olympics but which will never be included in any official tally of public spending. Still, it’s been estimated that the people in power, provincially and federally, are spending something like $6 billion on the 2010 Games. That includes the creation of a $900-million security apparatus to keep those dirty protesters out of sight prevent terrorist attacks during the Games. This is what the state has chosen to spend your tax dollars on — not fundamental public services like health care and education, but a bloated and pointless spectacle.

What we’re seeing here is the ongoing erosion of the government-funded social safety net in Canada. First, there are tax cuts, which reduce government revenues. (As Erin Weir points out, the Conservative government’s tax cuts “will cost $44.4 billion per year in lost revenue by 2014-15.”) If there’s a budget deficit, it’s used to justify cuts to public services; if there’s a surplus, as we saw under Jean Chretien and Paul Martin, it’s used to pay down the debt and cuts are justified as “keeping our house in order.” Then something like the current economic crisis comes along, decimating government revenues. The result is a budget shortfall which justifies additional cuts. When the economy eventually “recovers,” it’s used as an excuse to introduce further tax cuts, which we’re told we can afford because times are good. And so on.

Who benefits from this? The same people who own the politicians who claim to speak for us: the people with money, the elite class that owns and operates the businesses most of us work for. Low taxes serve their interests, since they end up with more profits in their pockets; so does a weak social safety net, which makes for a compliant workforce (you’ll put up with lower pay and inferior working conditions if, for one reason or another, you can’t afford to leave your job). As long as essential public services are funded by governments in thrall to business interests — and in a capitalist system, all governments are ultimately in thrall to business interests — then those essential public services will always be under threat, and politicians will cut as much as they can get away with in order to please their masters.