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Your Toronto 2014 Issue Navigator

How the candidates compare on some of the city's biggest issues.

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politics

No Interest in Paying Interest Payments

The Budget Committee, once again, fails to understand how budgets are supposed to work.

On Tuesday, the Budget Committee met to finalize its draft of the 2013 operating and capital budgets. (They go on to the Executive Committee today and to council next week, where they may be revised further.) During that discussion, councillor John Parker (Ward 26, Don Valley West) fired off four tweets that nicely encapsulated the rigid economic orthodoxy of the Ford administration, if that’s what we’re still calling this thing that’s going on now at City Hall. Our Mayoral Interregnum?

“Comments at this afternoon’s budget committee meeting note high level of capital spending paid from current revenue. As if it’s a bad thing,” went the first tweet.

Moments later came:

Followed by:

And finishing off with a populist rhetorical flourish:

All very reasonable-sounding, from a reasonable-seeming councillor sitting in the reasonable zone on the right side of the political spectrum.

Except they actually aren’t.

Note, if you will, the theme running through Councillor Parker’s tweeted thoughts. For the City to build things, big things, things that are necessary for it to function properly (roads, public transit, everyday infrastructure needs)—the capital spending—we must sacrifice a certain level of daily niceties like firefighters, recreational programs, and late night bus routes in under-serviced areas. All the stuff paid for from current revenue and casually referred to by the councillor as “other operating budget priorities.”

It’s an entirely fabricated zero-sum equation beloved by conservatives of all stripes who, in their heart of hearts, resent paying taxes and fundamentally believe governments should have a very limited role in the running of society. To them, the notion of public debt represents profligacy and overreach. A government without debt is the ideal state for conservative thinkers. Politicians like John Parker dream of a time when we are debt-free and we can then spend “more resources for other operating needs” in order to have “a more secure future.”

Superficially, this argument makes a lot of sense. Money spent on debt interest payments is less money spent on everything else. That’s just basic math in a world where those are the only two options available.

But look behind the curtain of this secure, debt-free future. There are only a couple of ways to minimize debt payments: with lower interest rates, which are largely beyond a City government’s control, or by minimizing debt. You minimize debt, you minimize the number of big ticket items you can afford beyond what you can pay for immediately.

Again, that all sounds very sensible and fiscally prudent until you realize that very few people or businesses actually operate like that. Everyone has access to debt, whether it’s credit cards, mortgages, car payments, or small business loans. The key is having the right kind of debt, and managing that debt properly.

Only in the fevered minds of politicians like the Ford brothers, budget chief Mike Del Grande, and Councillor John Parker has the City of Toronto not properly managed its debt. They point to rising expenditures on both the operating and budget sides of the ledger as proof of out-of-control spending during the Miller years, ignoring other possible causes like a growing population, continued intransigence on the part of Queen’s Park and Ottawa to equally share the burden of local governance, and aging infrastructure in need of good repair work. But debt, to them, is always and only the result of bad management, not a legitimate financial tool to be utilized for the good of the city.

Responding to Parker, one Twitter commenter wrote this:

That may be true of some on the budget committee (I’m looking at you, Councillor Di Giorgio), but I think Councillor Parker is smarter than that. He does understand the value of debt and its power to enable governments to build and maintain the foundations of a liveable society. It just grates his conservative ideology—and possibly his perception of his re-election chances. This is the same ideology, and same political considerations, that rule out serious talk of robust ways to increase revenues rather than cutting costs and services.

When it comes to City budgeting, there’s little perceptible difference between Parker and his more rabid conservative colleagues. It’s all about costs. Costs, costs, costs. Benefits rarely enter into the conversation. And revenue? That’s just another word for taxes, and for conservatives, well, “Toronto taxpayers are not a community of human cash registers.”

As we head into next week’s final budget lap, don’t let Parker’s pleasant, low-key demeanour and mildly amusing and innocuous-sounding tweets fool you. He’s a conservative through and through, and while they all may be preaching fiscal prudence, they’re not articulating principles that make fiscal sense.

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