AltAusterity Digest #94 April 10-17, 2019

The Ontario government plans to cut almost 3,500 full-time teaching jobs in the province over the next four years for savings of $851 million. The cuts will also shed positions through attrition, meaning those teachers that quit or retire will not be replaced. According to the union representing secondary school teachers, the Ontario Secondary School Teachers’ Federation (OSSTF), there has not been a surplus of teachers in the province since 2013, when it was 40 teachers. Ford has warned the teachers’ unions not to strike and has said that they “declared war on” the PCs even before they took government.

New Zealand’s Labour government has abandoned plans to impose a capital gains tax on investment properties, shares and business assets. After advocating for the tax for almost a decade, Labour succumbed to pressures from opposition parties. This reversal occurred despite that in February, a government-appointed advisory group found that instituting a capital gains tax would make New Zealand’s tax system fairer, recommending a rate that matched the highest income bracket. The Labour Party governs in a coalition with a populist party, New Zealand First, which refused to back the tax.

Lebanese Prime Minister Saad al-Hariri has said that the country will face “catastrophe” if the government does not agree with what is considered the most austere budget in the country’s history. The “difficult and painful” reforms will take aim at a public sector pay, high debt servicing costs and large subsidies given to the power sector. Several protests have emerged in opposition to the coming cuts. Hariri has said that the Lebanese people must be ready to make sacrifices. The proposed reforms could help Lebanon receive about $11 billion in financing that was pledged at a Paris conference last year for infrastructure investment.

Three years after Brazil introduced its constitutional expenditure ceiling amendment, it has become clear that the policy is not working. In 2018, GDP was 5% lower than in 2014, and unemployment has increased from 4.8% to 12.3% over the same time. Despite the use of an expenditure cap resulting in deep cuts to spending, the fiscal deficit and public debt have both increased due to declining economic activity and tax revenues. Aside from fiscal concerns, a deepening public health crisis may emerge in Brazil as spending on public health and education are projected to decline from 2.41% of GDP in 2017 to 1.94% in 2026 and 1.5% in 2036 under the current system.

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