AltAusterity Digest #107 August 15-21, 2019

The prospect of Brexit has raised questions about a second Scottish independence referendum. Scottish independence would raise several fiscal questions for Scotland. During Scotland’s 2014 independence, fiscal policy was an important issue. The “No” campaign often pointed to how Scotland benefited from higher spending per capita than in England as a result of being in the union.  While Scotland’s deficit is at a seven-year low due to spending cuts, it currently runs a deficit at 7.0% of GDP compared to the 1.0% of GDP for the UK as a whole. Derek Mackay, Scotland’s finance secretary, has stated that Scotland leaving the UK would open the door for different economic and fiscal policy decisions than those made in Westminster.

Argentinian presidential front-runner Alberto Fernandez stated this week that his government would seek alternatives to austerity if elected. Following Fernandez’s presidential primary win, Argentinian asset prices plummeted as investors were worried about a potential return to more interventionist policies. In an effect to appease investors, current president Mauricio Macri appointed a new Treasury Minister, Hernan Lacunza. Despite rapid depreciation of the peso, a looming sovereign debt crisis, and rampant inflation, Lacunza has said that Argentina will eliminate the fiscal deficit by the end of the year.

Alaskan governor Mike Dunleavy has decided to limit highly controversial spending cuts to the University of Alaska due to public outrage. The initial proposal was to eliminate $130 million in transfers to the university, causing public backlash and controversy in the state legislature. A revised budget, signed Monday, still entails a $25 million cut to the university for the current fiscal year. Further cuts were made to Medicaid and other health programs. There is currently a campaign to oust Governor Dunleavy from office in an official recall election.

The Ontario Conservatives announced Monday that they are going forward with municipal funding cuts. Public health and child-care funding are two areas that will see cuts. The changes will take effect January 1st. Current municipal cost-sharing agreements in Ontario have the province typically pay between 75 and 100 per cent of costs for public health. The changes will see some municipalities – including Toronto – assume up to 30 per cent of the costs. Municipalities will also have to pay 20 per cent of the cost of new childcare spaces, which were previously fully funded by the province. These cuts come as the government tries to eliminate an $11.7 billion deficit.

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