How Canada Responded to the Financial Crisis Term Paper

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Political Science

Canada: Comparative Politics

Canada, like any other nation suffered terribly from the effects of the global financial crisis. The economic impacts from Global Financial Crisis were resolved through Canada's political and provincial administration structures. The Great Recession further intensified such trends towards elements of the precarious unemployment across Canadian provinces such as British Columbia mostly with certain population groups. This paper intends to illustrate how the global fiscal crisis has affected provincial economies in Canada.

Global Financial Crisis Impact on Provincial economies

The goal was to establish suitable forms of welfare states that mediated on the effects of forces of the global market forces through the determination of levels of state intervention within the provincial economic marketplaces. The liberal welfare regime in Canada as compared to the conservative one in Germany and social democratic from Scandinavian countries focused less on welfare provision and citizen security. This translated into a greater commoditization and lower quality allocation of resources to critical areas of the sector (Brownsey & Howlett, 2001). Global economic events like global financial crisis affected the comfort of the citizens through associated social consequences and reduced insulation from market swings. Financial crises have tendencies of making the long-lasting economic implications and structural effects (Dunn, 2003).

The financial system deleveraging in the dramatic economic impacts is best evidenced through the northern periphery. Canada is globally perceived as a haven with minimal economic implications from the financial crisis. The decline of Canada's post-crisis GDP of was relatively timid. An average of 3.6% decrease in economic activities between 2008 and 2009 led to the recession lasting for nine months (Yeh-Yun Lin, Edvinsson, Chen & Beding, 2013). However, the impacts on the budgetary process brought about by the crisis had long-lasting and reliable records in major regions. Budget deficits among the provinces averaged at above 6% GDP in the year 2009 and reduced to around 3% in 2012.

While such deficits increased pressures on provincial governments to respond to their with more sustainable options, it was moot on whether there was desire to avoid deficits at any costs due to historical low financing government debt costs. Ontario had 1.5% for fixed-rate bonds ranging for three years and 2.8% on fixed-rate bonds for periods of 10 years. With the glaring 'social deficits' across the provinces, there were alternate courses of action aimed at addressing budget deficits mainly through revenue increases and spending cuts (Farnsworth & Irving, 2011).

Health Care

In health equity, the desirable options for addressing budget shortfalls include raising revenue through progressive taxation forms and generating additional revenue. The provincial administrations should not be deterred from raising revenues based on the anticipated responses of administering action to expenditure activities (Brownsey & Howlett, 2001). The alternative implication is the identification of over-reliance elements of spending cuts, unlike income increases. The programs are viable options in figuring out fiscal deficits. Provincial governments have ruled out revenue increments since the start of the global financial crisis.

The position is that taxes will not be increased despite individual and corporate taxes for a large corporation and high-income earners decreasing extensively in the last three decades. For instance, corporate tax rates fell from above 50% in the 1970s to around 25% in the year 2012 on combined provincial and federal rates. Similarly, the top rate of marginal tax in the Canadian provinces continues to display a downward trend from 80% in the 1970s to around 49% in 2013. One of the striking elements since 2000 is the provincial 'own source' revenues where revenues from fees and taxes collected by provincial administration as compared to federal government transfers declined by 2.4% of GDP. The concept is primarily linked to extensive cuts of provincial rates on corporate tax based on the period (Dunn, 2003). Government-initiated reports assessing the finances of provinces such as British Columbia noted that alternative fiscal scenarios have revenue collections retained to highs of 2000 while budget deficits would be corrected by 2010.

There were more funds and resources targeting social services and programs. However, the major options that were placed forth by the provincial governments include addressing financial shortfalls and cutbacks on socio-economic programs expenditure on various areas. The affected sectors include program areas and health care spending with a direct relationship to the economic development aspects. In consequence, 2012 budgets have outlined extensive allocations for program cuts between 2012 and 2015. With such progressive political oppositions, provincial governments are implementing cuts on expenditures and increasing small tax rates (surtax) among those in the bracket of high-income tax to balance the budget (Hart & Tindall, 2009).

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Overreliance on cutbacks for specified programs as ways of addressing economic problems is described to have larger impacts to lower income individuals as compared to higher income individuals and widens the gap in inequities. It appears incredibly shortsighted when the implications of austerity budgets as implemented forego the ability to sustain domestic demand while provincial governments engage in public sector job cuts and widespread layoffs that also undermines the economy (Yeh-Yun Lin, Edvinsson, Chen & Beding, 2013).

Impact of Global Crisis on Education

The global crisis presented adverse impacts on the education sector in most provinces of Canada. Although the federal budget of 2012 increased allocations for education among Aboriginal communities, there was a freeze on education transfers given to provinces and led to the reduction of inflation-adjusted cash flows. Ontario and New Brunswick focus on implementing net educational funding reduction by close to $500 million in three years from 2012 to 2015 (Ciro, 2013). The exposure included cuts based on programs that had a high likelihood of undermining economic equity. For instance, Ontario's cuts led to low-impact grants where fund programs like family literacy and parenting centers were certainly negative implications of equity based on relevance of importance of literacy in making sustainable behavioral choices.

Financial cutbacks strategies adopted because of the global crisis rendered many families could unable to afford the costs of tutoring while those that already had children under private tutoring remained unaffected (Peterson & Nadler, 2014). This was the highlight of inequitable outcomes of the cutbacks. The provincial governments resolved to include all-day kindergarten targeting 3- to 5-year-olds in three years to 2015 to confront claims that it could not provide education systems in the Great Recession aftermath amidst the stagnating federal transfers of the general austerity drives. The representation was one of the critical contributions towards the improvement of economic statuses in the provinces such as Saskatchewan.

Social security functions became important components of the financial cushion in times of extended unemployment and in moments of people's inability to work. The element prevented citizens from making meaningful participation in the society and living comfortable and independent lives. Even as the spending social support had roles of traditional forms of examination on economic performance literature, various forms of analyzes establish multiple linkages for population economic issues and social assistance spending. The relevance of social protection in attaining equitable population outcomes especially under the Global Financial crisis concerns for the viability of policy review and implementation (Dunn, 2003).

The significance of such programs for supplementing levels of income among vulnerable population segments made expenditure on cutbacks a significant undermining factor for equity goals. In Ontario and British Columbia, the present government embraced the concept of establishing social assistance rates by developing a Poverty Reduction Strategy that touched on all provinces in 2008. Welfare rates in such areas had steeply declined after extended stagnation period, and people on general welfare were receiving approximately 35% short of the rates above reasonable amounts from 1996. It is for this arson that provincial administration looked into people's welfare rates and improved them to between 55 and 60% of the previous rates. It is not practiced to afford healthy diets, as well as adequate shelter under the social assistance allocations in the Canadian provinces such as Saskatchewan (Hart & Tindall, 2009). Citizens benefiting from welfare programs show below average official poverty lifestyles in Ontario and Alberta. In the end, provincial Commission focused on Reviewing Social Assistance in Canada called for increment of close to $100 for base rates in social assistance that was a 15% increase among the singles.

However, the budget of 2012 limited the increases to rates of social assistance to 1% across the board. This was below inflation and amounted to a cut in its realist terms. However, the element continued to limit extended increments until budgets were returned within balanced position. Increased benefits that had the positive impact on quality of life and health applications for social assistant recipients went under trimming processed. The affected areas included special dietary allowances and health benefits that allowed chronically ill people to access healthy diets (Ciro, 2013).

Global Financial Crisis Impact on Labor Market in the Provinces

The working population in most provinces of Canada has increased their reliance on food banks. This was an illustration of alternative major pathway where the global financial crisis.....

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