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Don Drummond, Matthews Fellow in Global Public Policy at Queen’s University and a former associate deputy minister in the Department of Finance (The Canadian Press)
Don Drummond, Matthews Fellow in Global Public Policy at Queen’s University and a former associate deputy minister in the Department of Finance (The Canadian Press)

DON DRUMMOND

Drummond report’s author gives Ontario budget a ‘B’ Add to ...

Rarely does anyone ask me about my experience of chairing the Commission on the Reform of Ontario’s Public Service without attempting to solicit expressions of disappointment and even regret that so few of the recommendations have been acted upon.

The question is puzzling because in the 14 months since the Commission released its report my personal, unofficial tally suggested that many of the recommendations had been implemented and few had been categorically rejected. For reasons that escape me, the Ontario government has been shy to keep the legislature, public and media up to date with progress against the Commission’s report. In Thursday’s budget, the Liberals stepped out of the shadows and delivered the tally. Of the 362 recommendations, 60 per cent have been acted upon, only nine have been explicitly rejected and the remainder are still under study. In the history of such commissions that isn’t a bad record, it being early in year two.

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As this tally amounts to a self-assessment by the government, it should be scrutinized for objectivity. Unfortunately, not all the required information has been made available. But some pieces suggest that if anything, the assessment is harsh. For example, the government says it has explicitly rejected the Commission’s recommended spending targets. Yet, the budget shows total program spending growth that is in line with what the Commission called for. Some areas show growth in spending that is a bit faster, but this is offset by others, such as health, where the line is held a bit tighter than the Commission envisioned. That is good enough for a passing grade in my class. Some areas said to still be under study have seen some action. For example, under achieving fuller scope of practice in health care, the province has opened the door for pharmacists to do vaccinations, and remarks by the Premier Kathleen Wynne premier a few weeks ago indicated there is still intent to expand the scope of nursing practices. “Under study” is usually public sector code for “not a chance,” but maybe that isn’t the case for some of the Commission’s recommendations that remain outstanding.

Perhaps a more valid test of the impact of the Commission’s work is whether the broad messages have been accepted. Here too, there is evidence that the ground has shifted. The Commission was troubled by complacency about Ontario’s growth prospects. We saw a once-powerful economy beset by serious challenges as its traditional export markets fade while competition from the emerging economies intensifies. The budget demonstrates an understanding of this and, drawing in part from the Jobs and Prosperity Council, paints a compelling picture of what a successful Ontario economy would look like. But much work remains on an action plan to make the transformation happen.

A direct implication of the Commission’s more sober view of Ontario’s economic prospects was advice to not slavishly accept private sector economic forecasts if they were viewed as rosy and to be realistic about revenue growth. The 2013 budget does use less-optimistic economic growth projections than the averages of private sector forecasts, although the difference is slight. The assumptions reflect the current weakness of the economy followed by an expectation of growth somewhat above 2 per cent a year. Given that Ontario has still not recovered from the 2009-10 recession, such growth is certainly feasible. However, actual progress will have to be closely monitored for the risks to the fiscal outcome. The Commission criticized the 2011 Budget for projecting base revenues (i.e. excluding the effects of tax changes) to grow considerably faster than the economy. Base revenues are now projected to grow slower than the economy. So, the economic and revenue assumptions have both been made more cautious than in previous budgets. This bodes well for hitting the fiscal targets.

The overall theme of the Commission’s report was to reform public services to increase effectiveness and efficiency so that more-modest spending growth can be achieved without jeopardizing quality of services. A number of early commentaries on the budget portend that little of this structural reform is taking place. The truth seems more in the middle between that view and the sweeping changes the Commission called for. Reforms are proceeding in many areas in health care, from the way hospitals and doctors are paid to where people with chronic care needs are cared for. In other areas, such as support for business, little tangible change has yet been seen. This is not surprising, given that the Commission essentially said business subsidies, on both the spending and tax side, need a complete makeover. Similarly, many have commented that public sector pension reforms are not happening. Yet, the government and public sector unions are engaged in the very important discussion of shifting the onus from pension contribution increases to trimming benefits when plans fall into deficit.

On balance, the take-up of the Commission’s recommendations seems quite reasonable and certainly doesn’t leave me feeling discouraged or having regrets. But Ontario is still in the very early days of fiscal reform and much heavy lifting remains to be done. The deficit in 2012-13 is well below plan but much of the gain is due to temporary factors. Spending growth will have to be minimal over the next four years to balance the books. Austerity of that depth and duration cannot be maintained unless the programs are reformed to enhance effectiveness and efficiency. Otherwise, the quality of services will deteriorate and the government will inevitably cave to public pressures and ramp spending back up, repeating the traditional fiscal cycle back into deficit. In some areas the spending projections are still just numbers on a piece of paper without the backing of solid plans of reform. In other words, most of the remaining 40 per cent of the Commission’s recommendations need to move from “under study” to “implemented”. Only then can an ‘A’ be awarded.

Don Drummond is Matthews Fellow in Global Public Policy at Queen’s University, the former chair of the Commission on the Reform of Ontario’s Public Services and former federal associate deputy minister of finance.

Note: The author is offering personal views and is not representing the Commission.

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