Austerity: It's not just for Europeans anymore.
As if it weren’t enough that 2012 is the year some Mayan meteorite or supervolcano busts the planet open like a November pumpkin, now the man who is supposed to chart our path to economic health is furrowing his brow and telling Ontarians to prep for tougher times ahead.
In a few weeks Don Drummond, celebrity economist and head of the commission looking for ways to cut costs in the Ontario public service, will release a report detailing his findings. Speaking to the media yesterday, Drummond was blunt about what’s coming, warning “There’s pain in every single chapter.”
This won’t come as a surprise to anyone who’s been tracking Ontario’s economic fortunes of late; our economy has been hit hard by the ongoing global financial turmoil. Lacking Alberta’s acres of oilbearing mud to dig up and pipe to China, Ontario is highly dependent on trade with the U.S., where economic recovery is continually on the horizon but never seems to get any closer. To keep Ontarians feeling safe and cozy, the McGuinty government has been running big deficits the last few years, on the premise that when the factories started churning out widgets again we’d pay down our credit card and start lecturing other provinces about fiscal responsibility like in the old days.
However, economists are now saying that with the Euro-zone economies in a chaos of Mediterranean hand-waving and stoic Teutonic “I-told-you-so’s”, and the U.S. outlook still uncertain, crapulent economic growth may be the new normal in Ontario. And with our credit rating already at risk, deficit-pruning season is upon us.
What this means to those of us who use Ontario government services is that things are going to change, and probably not in ways we’ll enjoy. As we learned from Mayor Ford, finding cash through the magic of “efficiencies” is easy to promise and hard to do. It certainly isn’t impossible, but such restructuring typically requires the kind of analysis and design that makes it a long-term exercise, and we need to impress Moody’s today.
Full details of Drummond’s recommendations won’t be known for a few weeks, but the Star reports that one of them will be opening up numerous programs to bidding by outside companies, as well as by the unions that presently do the jobs. It remains to be seen how the public service will respond to such an initiative, but anticipate tough talk from union leaders to scare the government, paired with syrupy radio ads to secure public sympathy.
While the key portfolios of healthcare and education are too important to gut, they’re also too big to ignore. Drummond would like to save medical dollars by limiting growth in physician salaries, and investing in more comfortable, cost-effective care alternatives for patients who don’t need expensive hospital beds. On the school front, the commission wonders whether it’s necessary to maintain the McGuinty-mandated maximum classroom sizes, especially since we’re already facing a challenge finding enough Early Childhood Educators.
The government isn’t required to accept the commission’s recommendations, and in fact they’re already hedging their bets, with a “senior government source” harrumphing to Adam Radwanski in the Globe that whatever happens will be based on a Liberal plan, not a Drummond plan.
Still, beyond service cuts, government options are limited. On the revenue side, they’re already musing publicly about deferring planned corporate tax cuts, which would please the NDP and antagonize the Tories. On the other hand, even suggesting higher personal taxes would be political suicide, and if included in the next budget could easily mean the toppling of McGuinty’s minority by an opportunistic opposition.
With luck, Drummond will prove us wrong and find real efficiencies quickly, minimizing tough service cuts. With luck, Ontario’s economy will make a stronger-than-expected recovery in 2012. Without luck, it could be a bumpy ride.