On the day before the provincial budget is presented, the Provincial Minister of Finance, Dwight Duncan, was at Ryerson University in Toronto with the Minister of Training, Colleges and Universities, John Milloy on March 28, 2011.Peter Power/The Globe and Mail
The Ontario Liberals' new budget continues the government's generally sound plan for the province's finances and economy, and it is mercifully free of the election-year inducements that so tempted the federal Conservatives. But it punts the biggest question - how to reform a broader public sector and bring down a wage bill that takes up a growing share of the province's spending - for another day, even though that day should be today.
The budget is not, by itself, an election platform, because it has little in the way of major new plans. The McGuinty government is continuing its strong recent track record on taxes, sticking to its plans for corporate income-tax cuts and a harmonized sales tax in the face of NDP demands for higher corporate taxes and the Progressive Conservatives' flirtation with an HST cut. Its economic plan has a strong educational focus, and 60,000 new spaces for postsecondary students continue that path. The province needs, however, to make sure that those students are not packed into overcrowded classrooms that reduce the quality of their education.
Two of the few new measures have a commendable focus on preventive health care. It comes in at just over $100-million over three years, but more breast cancer screening for women aged 30 to 49, and new money for a mental health and addictions strategy, should help reduce major disease in two underserved populations.
The budget also includes some strong moves around financial management. Spending this year has come in at $3-billion, or 2.4 per below what was expected. Unlike their federal counterparts, Ontario is making, and announcing, some tough choices, scaling back plans for eHealth, closing jails and cancelling a planned Toronto courthouse. A 10-per-cent cut in executive offices at hospitals and universities should bring some restraint to CEO salaries, while still ensuring that these organizations can hire the best people.
But savings around that last item are unknown, and the hole in the budget created by rising wages in the broader public sector is much larger, running into the billions of dollars. The province is proceeding a bit too slowly in its march to eliminate the deficit; they will only reduce it by $3.4-billion in the next three years, and annual interest-on-debt payments will rise by $3.1-billion over the same period. (The federal government is moving more quickly to balance.)
Immediate fixes to bring down the wage bill, such as changes to the province's arbitration system, were possible. Instead, the province has outsourced the problem; respected former bank economist Don Drummond will lead a commission on public sector reform. The government is, to its credit, open to having public services delivered by other institutions, like social enterprises or the private sector. But otherwise, its painfully general suggestions - "embrace innovation;" "unlock value" - do not respond to the urgent need for savings.
To strike a commission of this kind now, so late in its mandate (and not to report until after the election), even though the problem has been manifest since before the recession, is an abdication of responsibility.
That said, none of the parties have presented a convincing path to fiscal balance, and that includes the Progressive Conservatives, who have little that is realistic or concrete to say on this issue. The elephants in the room remain.