The president of the Thunder Bay Chamber of Commerce says the province’s much-anticipated austerity report may have underestimated potential revenue streams, particularly in the Ring of Fire.
Harold Wilson said he likes the fact the report is attacking Ontario’s rapidly growing deficit and debt, which left unchecked will cost taxpayers long-term to cover the interest payments – at the expense of other projects and sectors.
But Wilson said he told Finance Minister Dwight Duncan two years ago that revenue was what the province should be looking at to make up a portion of the shortfall.
“I was kind of surprised,” Wilson said. “I thought they kind of understated the plus side. They could have been taking a look at that more.
“The big question is how can the Ontario government try to help and support it so we can see the benefits of this as soon as possible?”
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In the report Drummond, a former chief economist with the TD Bank, recognizes the Ring of Fire as a significant opportunity to improve socio-economic opportunities in the North, and managed properly can provide benefits over several decades.
It also means spending money, contrary to most of the 362 recommendations he made in his 540-page report, including labour support programs for First Nations people.
“This approach would include implementing a full range of employment programs and related social supports that are available through social assistance for recipients living on reserve,” Drummond writes.
“These include education programs, job-specific training, literacy programs and programs that support young parents.”
The bottom line, Drummond added, is for the Ontario government to ensure it “maximized opportunities for Aboriginal people and all Ontarians.”
Still, unlike many media outlets across the province, Wilson said he doesn’t look at the report as gloomy.
Nor does Lakehead professor Livio Di Matteo, who writes in his Northern Economist blog he's felt all along the report was a bogeyman designed to scare Ontarians before less austere measures are taken in the actual budget.
Di Matteo goes on to say the report does have plenty of interesting and useful ideas, many of which won't suit the government's eye.
"All in all, this is not bad news for the North," he said. "The specific focus on the Ring of Fire and its potential benefits for Aboriginal people will hopefully provide an impetus for the provincial government to pursue this region as an investment frontier for the entire province."
Di Matteo also pointed out regional gas revenues could also lead to regional resource revenue retention.
Meanwhile Lakehead Public School Board director of education Cathy Siemieniuk cautioned the report makes a series of recommendations, but there’s nothing forcing the government to act on any one of them.
Education was targeted heavily by Drummond, who called for a one per cent annual increase cap on spending, the elimination of all-day kindergarten, cuts to non-teaching positions and user fees for school bus services.
“A capping to one per cent, of course we’d need to look at our revenues. In education we have to pass a balanced budget, so we’d need to look at our spending and determine how we could do that,” Siemieniuk said, acknowledging cuts are coming across the board in the public service.
Until they come, however, Siemieniuk isn’t going to get too worked up. The province has already stated it won’t cut all-day kindergarten, regardless of what Drummond recommended.
“I also recognize this is not a time for panic. This is a time for reasonable, retrospective thought. I have a great deal of faith that the government will make decisions that are considered best for the population of Ontario,” she said.
Liberal MPP Bill Mauro says the province will take Drummond’s sweeping economic reform recommendations under advisory, but cautions they are by no means set in stone.
Mauro, who represents the Thunder Bay-Atikokan riding, was given a Coles Notes version of the highly anticipated austerity report in a conference call earlier in the day, and said what Drummond provides is advice, not guidelines for the budget.
“On a go-forward basis we’re obviously going to take a look at all of his recommendations, all 362 of them. Some will probably find their way into the budget and others will not,” said Mauro on Wednesday afternoon, minutes after the report was released.
Mauro didn’t want to play the label game, when asked to assess public reaction to the report.
“I don’t feel the need to characterize it. People can describe it as they see fit. I think it is what it is. We know that all levels of government, federal, provincial and municipal … are all faced with these issues today. We’ve come through the recession and we invested during the recession so things wouldn’t be any worse than they already were,” Mauro said.
“Now it’s time for some restraint and that’s what’s coming.”
Minister of Natural Resources Michael Gravelle (Lib., Thunder Bay-Superior North) said the next few weeks before the budget is released is a time for stakeholders and members of the public to weigh in on the report.
“That’s our goal, I think, and our commitment,” Gravelle said. “Mr. Drummond has brought forth recommendations and it’s the government job to make the decision as to which aspects of the report we will be implementing. So we still have a big job ahead of us.”
Recommendations included everything from higher hydro bills to tighter controls on public-sector wages, to larger classrooms and an $1,100 cap on the child-tax credit, which the government has promised to increase to $1,310 in the upcoming budget.
There’s also a segment of the report that calls for ministries to manage a pooled evelope of direct and indirect business support, financed by ending all direct business support programs by March 31, 2013, which Wilson underlined and questioned whether it meant the end of the Northern Ontario Heritage Fund Corporation, though said he’d prefer to get further confirmation about the wording of the recommendation before commenting further.
Di Matteo has a suggestion, however, noting the report calls for a shift from job creation to productivity growth in the private sector.
"Refocusing the NOHF to productivity investments is not a bad thing," he said.
In the report, Drummond says unless the province cuts its spending levels drastically, Ontarians could be facing record deficits of $30 billion, with the debt nearly doubling from $215 to $411 billion by 2017-18.
The cuts are necessary, he said, for the province to “escape its recent history of rising public debt that forces the government to spend more than it should on interest payments.”
Under Drummond, a former chief economist with TD Bank, health care spending increases would be capped at 2.5 per cent, nearly a third of the current jump each year.
Education spending increases would be capped at one per cent a year.
Drummond added he expects many of his recommendations to be rejected, but added they should then be replaced by a better idea, “one that delivers a similar fiscal benefit.”
Follow Leith Dunick on Twitter: @LeithDunick
