Prepare for post-election pain, no matter who wins Ontario vote

TheStar.com – news/canada/politics
Published On Sat Aug 20 2011.   By Martin Regg Cohn, Queen’s Park Columnist

No matter who wins on voting day, brace yourself for the morning after — Ontario’s day of financial reckoning.

Forget all the campaign rhetoric from politicians pledging to bring the province’s finances under control without inflicting pain. They all know better, and so should you.

As you read this, a complete rethink of government services is being carried out by a little-known fiscal commission labouring in the shadows. Pain is probably unavoidable, regardless of who wins power on Oct. 6.

The commission is no stealth mission, but it is flying under the radar. Its mandate, embedded in the last budget, is to seek out government waste and identify services for privatization.

Its report will help avoid the kind of Gong Show we’re seeing at city hall, where Mayor Rob Ford is flying by the seat of his pants after promising to cut the gravy train with no pain — and no plan. Having told voters what they wanted to hear, then hiring private consultants to tell politicians what they already knew, Ford is now chasing his tail.

In contrast to the chaos at city hall, a more sophisticated strategy is taking shape behind the scenes at Queen’s Park. The commission is the brainchild of Finance Minister Dwight Duncan, who recognizes that a clear roadmap can offer political cover to make unpopular but unavoidable decisions. The final chapter, of course, won’t be written until the ballots are counted on Oct. 6.

The chair of the Commission on Reform of Ontario’s Public Services, Don Drummond, is marching to his own drummer. While Duncan stresses that health and education aren’t on the chopping block, Drummond points out that health takes up nearly half of all program spending in Ontario. He believes up to 25 per cent of it is wasteful, “so obviously that’s the kind of stuff you go after, that would be the least painful stuff.”

Ontarians should be prepared for pain in other areas: “I don’t think there’s any guarantee that there’s never any pain involved in it,” Drummond told me.

Ontario has produced balanced budgets only three times in 30 years. It achieved this by deferring infrastructure investments that can’t be put off forever — a chronological shell game. Past Tory governments have slashed programs across the board, but pent-up demand for services later caused a rebound in spending.

The real challenge is to bend the cost curves by finding more efficient ways of spending, achieving true value for money. Only then can the province’s finances become more sustainable, so that balanced budgets aren’t blips. Yet even the most enlightened cuts require a political consensus and Drummond, the man behind the plan, believes the public is not yet prepared.

“Whoever forms the government on Oct. 7 is going to find themselves in a deep fiscal hole — there are going to be no surprises,” says Drummond, an economist and former senior federal bureaucrat. “The public, certainly, doesn’t completely understand it, and I don’t know whether the political parties completely understand it.”

Ontario’s budget deficit is $16.3 billion, and it’s accumulated debt exceeds $235 billion. In a pre-election budget report last month, auditor general Jim McCarter said there were no hidden deficits (like the infamous Tory budget of 2003). But he cast doubt on the Liberal government’s target of restraining program growth below 2 per cent, saying past performance belies that scenario.

Drummond counters that it’s possible to do things differently than in the past, to at least slow the rate of growth. However, PC Leader Tim Hudak is promising to go even further with 2 per cent cuts (apart from health and education) while still cutting taxes. Whoever wins on Oct. 6 will want to have a chat with Drummond soon after.

“Somebody is going to have to do something, and it’s going to have to be fairly forceful. Hopefully, it will be strategic and intelligent, and it will minimize any kind of pain — and there likely will be some (pain) involved with it,” he says.

“My guess is that come Oct. 7, somebody is going to be knocking on our door asking for ideas.”

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