Canada’s biggest and arguably most American province has many of America’s biggest problems as well—slipping competitiveness, a stagnant middle class tax base, growing entitlement obligations, a chronic public deficit, and a generation of politicians who rose to prominence and got elected promising to be creative and constructive in an ever-growing Ontario.
The great recession of 2008-09 exposed these problems; the recovery isn’t solving them.
It has been long understood within the government, across political parties, and amongst the government’s stakeholders that Ontario’s budget (now approximately $16b in deficit) cannot return to balance without painful changes. Nevertheless, over the last year, Ontario’s political parties, campaign strategists, platform writers, special interests, and senior public servants have carried on publicly as if new promises were viable and as if their deficit reduction plans were real.
One year of denial isn’t a crime in politics.
The politicians didn’t laugh at each other’s economic forecasts. When Premier McGuinty was questioned to be more specific about how he’d address the deficit, he’d say: “I’ve appointed Don Drummond, a distinguished former federal public servant and bank economist, to study the situation and review our programs in detail.”
Yesterday, Drummond delivered his report: its 125-page executive summary includes 362 recommendations to cut costs and raise some revenues. He forecasts a $30b deficit in 2018 if his plan isn’t implemented. He proposes an annual spending seven-year cap of only 0.8% in total program spending—healthcare would be limited to 2.5%, post-secondary to 1.5%, and social assistance to 0.5%. Everything else in government, except interest payments, would shrink by 2.4% a year.
To make these targets real to policy wonks—and much less so to politicians—he offers dozens of eye-popping ideas: make students pay more to go to university or college, have everyone pay more for electricity, have affluent seniors purchase their prescription drugs, and, for instance, have teachers teach in larger classrooms and retire later.
Premier McGuinty’s response to the Drummond report, predictably, is shameless and uncertain.
Most of the recommendations and analyses in the report represent an exhaustive excavation of advice, ideas, and warnings that the Premier and his ministers have received verbally and in writing from loyal public servants over the past seven years. The major observations about the big choices and the dimensions of the problem were well known and could have informed this year’s provincial election.
Rather than the most extensive study of its kind “since Confederation,” as the Premier boasted, you could say that Drummond has documented one of the most wide-ranging cover-ups in modern Canadian politics.
Substantively, the government’s first concrete response may fundamentally sabotage the enterprise.
Ontario Finance Minister Dwight Duncan neither endorsed the fairness or soundness of the overall report. He didn’t worry whether they had time to make complex structural changes that would be required or whether it was fair and tolerable to limit growth in social assistance support to only 0.5 annually—a third of the growth rate for education. No. He simply reiterated that the Premier’s new idea, a $billion full-day universal kindergarten program will go ahead.
With that decided, every stakeholder of every existing social, economic, and educational “investment” in Ontario is free to seek exception—arbitrarily or otherwise.
Barack Obama may be a procrastinator too. But, in receiving the Bowles-Simpson recommendations on the US federal deficit, he didn’t say that tax deductions for home mortgages, defense, or medicare expenditures were off the table.