Barely getting by

Ontario is not Greece. Not yet. That’s the good economic news. The bad news is, Ontario is caught squirming between several economic rocks and a hard place.

The McGuinty government has no idea how to squeeze out of this predicament and has asked for help.

This is the picture after the official release of the Drummond Report last week. The province hired Don Drummond to decide what had to be done to eliminate the $16 billion provincial budget deficit and to avoid a crippling $411 billion debt along with $19.7 billion in interest. He made 362 recommendations and strongly suggested that every one be implemented immediately.

Mr. Drummond is a highly respected economist and his dismal tale should have been shared with Ontario taxpayers long ago. Mr. McGuinty, like many other politicians, had neither the courage nor the political will to be honest with taxpayers. He chose instead to have a consultant do his dirty work for him. He also chose to release the report after the election last fall.

How the mighty have fallen. The province of Ontario was once the economic engine of the country but these days we’re barely getting by. We now live in a have-not province. 

This year our province will receive $3.2 billion in equalization payments which the finance minister says isn’t nearly enough. If we don’t change the way the economy is managed our situation will get much worse, warns Mr. Drummond.

A lot of attention is focused on Dalton McGuinty and his legacy of unaffordable promises and policies. Now that the province has run out of money and credit, comparisons are being made with Mike Harris’ “common sense revolution” a decade ago. As it turns out, this is an unfair comparison.

The Harris government cut spending by 3.9 per cent for three years and we all remember the turmoil and protest that resulted. The cuts recommended by Mr. Drummond amount to about 16 per cent and will last years longer. Most of Mr. McGuinty’s favourite programs, tax credits and subsidies will now have to be rolled back or severely cut. The Mike Harris government will look like the good old days by comparison.

If the present government decides to rescue Ontario from its struggling economy, rising unemployment, shrinking revenues and crippling debt, it will need to implement the recommendations in the Drummond Report. 

Most observers think this is a highly unlikely scenario for this or any other government concerned with being re-elected.

Nothing Mr. Drummond had to say is unclear or open for debate although some groups are already complaining about losing their entitlements. If all 362 recommendations are implemented there will be many more special interest groups to deal with. No wonder the premier has been hiding the truth from us.

Big ticket items will yield the biggest bucks. Cancelling full-day kindergarten will free up a billion and a half but Mr. McGuinty has already taken this pet project off the table.  Lower spending on health care is another big ticket recommendation that will be difficult or impossible to implement. A generation of aging baby boomers is already pounding at the clinic door.

Mr. Drummond warned any recommendations rejected will have to be made up with other cuts in services or increases in user fees. He wasn’t asked to consider tax increases. I’m sure the McGuinty government will thoroughly explore that easy cash grab from taxpayers.

The thing is, these measures would be necessary and highly recommended even if Ontario had a budget surplus.

As Mr. Drummond explained, it’s time to change the way government works and the way services are delivered. The age of unlimited entitlements and government ¬mis¬man¬agement is over. If we continue on our present path it will be at our own peril.

It is always frustrating for taxpayers to watch elected governments piddle away their future on pet projects and ill-advised policies. It is also very disappointing to be suddenly slapped in the face with all the overdue bills.  Mr. McGuinty has been accused of fiddling while Ontario burns.

For their part, Ontario taxpayers are in denial as well. Only 30 per cent support the Drummond Report with 32 per cent opposed and 38 per cent undecided. I guess the situation will have to get a lot worse before anybody really worries.

In the meantime the handwriting is on the wall. Governments at all levels know what has to be done.  The problem is, they just don’t know how to do it and still get re-elected.