Health care and education in Ontario should be protected from restraint measures the government plans to introduce next year, leaving every other program potentially taking a hit, says an economic adviser to the government.
That’s the preliminary advice of Don Drummond, a former TD Bank economist and trusted adviser to the McGuinty government, who is conducting a wide-ranging review of all program spending, just as the province braces for another round of gloomy economic times.
Finance Minister Dwight Duncan will unveil his fall economic statement on Wednesday, which will reiterate the government’s pledge to erase the deficit by fiscal 2017-18. To meet that target, the government must cap annual growth in total program spending at 1 per cent a year for the next six years, Mr. Drummond says.
But he doesn’t think the pain should be shared equally. Mr. Drummond is advising that spending on health care and education, key priorities for the McGuinty government, grow 3 per cent and 1 per cent a year, respectively.
With health care and education together accounting for 68 per cent of the $114-billion the government spends on programs, the budget for everything else, including such things as transportation, court houses and children’s aid societies, would have to be cut 1.6 per cent a year, according to calculations done by The Globe and Mail.
No decisions have been made and the numbers are “changing every day,” said a government official. But making such cuts would be no easy feat for a government that has presided over annual spending increases averaging 7 per cent since fiscal 2003-2004.
In its Speech from the Throne on Tuesday, the government pledged to protect health care and education as the province’s most important public services, even as growth in the global economy slows.
“Reforms will not compromise quality,” says the Speech, delivered by Lieutenant-Governor David Onley.
Mr. Drummond plans to deliver his report to the government in January, in time for next year’s budget. But the Throne Speech sets the stage for significant economic upheaval – and a potential showdown between the minority government and the Official Opposition.
“We don’t fully know what the global economic uncertainty means for Ontario, and for our families, yet,” the Speech says. “And we expect the slower pace of growth to continue throughout the four-year mandate given to this Parliament.”
Progressive Conservative Leader Tim Hudak said the 37 members of his caucus will not support the Speech, setting out the governing Liberals’ blueprint for their third term, because it contains no measures to create jobs or rein in spending.
A Throne Speech is considered a confidence motion, meaning it theoretically could bring down the government if the New Democrats also do not support it. Together, the Tories and NDP have 54 of the legislature’s 107 seats, one more than the Liberals.
But such a spectre was short-lived after NDP Leader Andrea Horwath took a much more conciliatory approach,shortly after Mr. Hudak made his threat. Ms. Horwath said her caucus members will take a “wait-and-see” approach and try to work with the Liberals.
“I think they have opened a little door here in terms of working with other parties,” she said.