As long as the minority Liberal government is in power in Ontario, the proposed budget released on Thursday will be the way of things. The Liberals have bought into the necessity to challenge public-sector unions and the broader public sector. That’s what the fight with the teachers union this school year was all about. They do not, however, embrace structural change, in the sense that the Progressive Conservative Party does. They do not have in mind a second wave of efficiencies, beyond what they set out last year on public-sector compensation.
When former premier Dalton McGuinty asked economist Don Drummond last year to report on the province’s fiscal crisis, he was asking for ammunition he could use to turn the party from kowtowing to the unions to holding the line on compensation and beginning to reform public-sector pensions.
It is a difficult task, because Ontario is a once-rich province in a grim fiscal situation and whose prospects are not bright over the next few years, but whose people are accustomed to generous public services, and whose public-sector workers have been well-treated. So Mr. McGuinty’s successor, Kathleen Wynne, needs to bridge the dim fiscal reality and the unfortunate political reality in which the NDP holds the balance of power. She also needs to make strategic investments in education and physical infrastructure to ensure the province stays competitive.
The budget stays the course toward a balanced budget by 2017-18, but offers nothing strikingly new that would suggest a vigorous desire to deal with Ontario’s fiscal problems. What would Mr. Hudak do? Move public-sector pensions from defined benefits to defined contributions, which would cost less. He would cut thousands of government jobs. Even though these are anathema to Ms. Wynne, she still had options. The province’s success in holding health-care spending to 2.2-per-cent growth last year suggests that the government can slow a spending juggernaut when it turns its mind to the task. The rest of government surely has room for new thinking, even if the Liberals do not wish to touch their expensive full-day kindergarten expansion.
The budget maintains a modest course toward a necessary goal, and healthier-than-expected revenues gave Ms. Wynne a bit of wiggle room to meet, in a reasonable way, some of the NDP’s spending demands, which included more money for home care and for youth employment initiatives. But nothing in the budget spoke of an urgency and creativity to confront the fiscal peril facing Ontario.