Ontario has to undertake the most aggressive budget slashing program in Canada and more than double cuts to spending if it wants to balance the books within five years.
This was the stark warning top civil servants delivered the government in a briefing earlier this year, shortly before Premier Kathleen Wynne replaced Dalton McGuinty as the province’s leader.
Notes for that presentation were unearthed by the Progressive Conservatives after they turned up in a stack of papers disclosed to a legislative committee, offering a rare look inside cabinet proceedings, which are usually highly confidential.
The briefing says the government’s austerity program has made progress in controlling expenses, but that the province will have to cut much deeper. Adjusted for inflation, government will have to slash per capita program expenses by 12 per cent between 2011 and 2017.
“No other Canadian jurisdiction, over their anticipated timeframe to balance, projects a decline in real per capita program expense of this magnitude,” the notes read. “In order to balance in 2017-18, the government will need to reduce the deficit by $2.5-billion each year for the next five years, or 2.5 times more than the deficit reduction over each of the past two years.”
The document indicates that some deficit-reduction measures the government planned to take have been delayed, including legislation meant to control health spending and the divestment of a money-losing railway in Northern Ontario.
The presentation was not the first time the civil service alerted the government to the enormous job ahead. In a memo in November, 2011, then-deputy minister of finance Peter Wallace, who is now the head of the province’s entire civil service, used a number of colourful examples to demonstrate the sheer magnitude of the necessary cuts.
By way of illustration, he pointed out that, even if the government somehow got rid of the entire administrative apparatus of the Social Services Ministry – which would entail laying off all case workers as well as people who process welfare cheques – the government would still be unable to meet its spending restraint targets.
“This is so far beyond administrative or efficiency savings it’s not even funny,” Mr. Wallace wrote. “More directly, this is more gravy than Ford even promised to look for.”
In an e-mail to fellow civil servants, Mr. Wallace explained why politicians had to be given such clear advice.
“We are now at the point in which the general screwed-up nature of the fiscal context and plan is being more broadly acknowledged. Not pretty,” he wrote.
He also pointed out the size of the government’s debt, writing that Ontario relies more on borrowed money than any other “state-level” government that he knows of. Even before the recession, when the government was posting balanced budgets, he wrote, it was borrowing money.
PC Leader Tim Hudak argued the fact that the civil service had given the government similar warnings in late 2011 and early 2013 shows that the Liberals had not heeded them.
“It tells you nothing has happened for two years, and [Mr. Wallace] is concerned that nothing has happened since,” Mr. Hudak said. “When I see these kind of documents from a senior civil servant, this tells me there’s a five-alarm bell.”
The Liberals countered that they have indeed been serious about bringing down the deficit, pointing to the fact that program spending has been held to 1 per cent increases for the last two years, deals have been reached to reform costly pensions and they are trying to control labour costs.
“Going forward, compensation costs must be addressed within Ontario’s existing fiscal framework, which includes no funding for incremental compensation increases for new collective agreements,” Finance Minister Charles Sousa’s spokeswoman Susie Heath wrote in an e-mail.