Social Policy in Ontario

It didn’t go according to plan.

By holding back the bad news — under the guise of a good-news budget — Ford’s Tories are belatedly paying a heavy price. Not as high a price, however, as ordinary Ontarians facing the daily drip-drip-drip of cascading cutbacks in recent weeks.

It all adds up to billions of dollars slashed from local education, transit, health care and social services. And it has provoked a growing backlash.

On paper, the budget’s title is “Protecting What Matters Most.”

In reality, it’s not protecting what matters most to Tories — their political survival.

Ford’s popularity is tumbling. And his government is reeling from the worst budget rollout in years.

Time for a change in plan.

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Instead of moderation, desperation and disruption are Ford’s new watchwords — because desperate times allow for desperate measures. Rather than talking up Ontario’s prospects, the premier is now taking the province down — way down.

Ford has announced a fiscal emergency that can now be revealed:

Ontario has been declared bankrupt. By our own premier.

B-A-N-K-R-U-P-T.

“We already came in here with a bankrupt province,” the premier now warns Ontarians every chance he gets.

“We were inheriting a bankrupt province,” he tells the legislature, a talking point faithfully repeated by his Progressive Conservative ministers and MPPs.

Who knew? Not investors, lenders, auditors or credit rating agencies.

But in Ford’s view, Ontario’s economy is coming apart like crumbled feta cheese in a Greek fiscal crisis. One of his top ministers went further by citing the spectre of Venezuela’s economic wreckage, as if Ontario might soon be a failed state.

Never mind those roadside billboards proclaiming “Ontario is open for business.” Now his Tories are spreading the word and telling the world we are under bankruptcy protection.

The underlying premise behind the overheated rhetoric does not require a degree in accounting (nor any degree at all, which suits our premier): Tough times call for rough cuts.

Because we’re bankrupt.

But are we? Were we ever?

Yes, years of deficit spending under Liberal, NDP and Progressive Conservative governments (with only a few years of surpluses under the Liberals and PCs) have piled on nearly $350 billion in debt. But a distaste for debt does not equal disaster — as many Toronto homeowners with outsized mortgages can attest.

Ontario’s finances may seem overstretched to some (including me, as I’ve written in past columns). But its net debt as a percentage of overall economic activity, as measured by GDP, has held steady at about 40 per cent over the past six years.

That’s a world away from the 175 per cent debt wall during Greece’s financial crisis. Which is why no credible credit rating agency, no responsible auditor, and no serious analyst would ever endorse Ford’s wild claims.

Bankruptcy is a false premise — like the premier’s false promise in the last election to trim the fat without impacting transit, health, education, or vital social services. Hyperbole aside, it is bizarrely off-message for our populist booster-in-chief.

On a post-budget trip to New York, Ford boasted of his stewardship to anyone who would listen — notably Fox News and “Faux News” (my term for “Ontario News Now,” the partisan mouthpiece that chronicles his every musing using taxpayer funds).

Suddenly the premier went off-script, so intoxicated by the heights of Wall Street that he started trash-talking his home province: Ford claimed, without evidence, that American money was leaving Ontario because our net debt was a bad bet — until he stepped in to save the day.

“All the investors (had) ended up leaving,” Ford repeated upon his return. “It’s been a bankrupt government.”

In fact, Wall Street bond-holders have never stopped lining up to lend us money, often at remarkably low rates because the risk of default is unfathomable. Not just lenders but investors made Ontario a top North American destination for foreign direct investment over the past decade.

In fact, Ontario keeps locking in the most favourable rates from lenders despite its per capita debt ranking second among the provinces, according to the legislature’s independent Financial Accountability Office in a report earlier this year:

“Ontario also compares favourably to other provinces on interest on debt spending, despite a relatively higher debt load. In 2017, the province’s interest on debt spending per capita was $858, more than $180 below the rest of Canada average, primarily the result of lower borrowing rates” (my italics).

The four major credit rating agencies “rate Ontario as an ‘extremely strong,’ investment-grade borrower,” the FAO noted last September. “Ontario’s credit rating ranks in the middle of the pack compared to the other provinces.”

Not the best, not the worst, but by no means bankrupt. So why is Ford bashing our province every chance he gets?

It’s a helpful distraction — a useful justification for slashing spending. When his soft sell didn’t go according to plan, time for Plan B.

The premier’s early strategy was to pacify Ontarians by withholding the bad news from April’s budget. A month after its release, “Protecting What Matters Most” has failed — both as a title and a talking point.

Once people pushed back against the budget’s death by a thousand cuts, Ford started scaring us to death with his doomsday talk: Ontario defaulting on its debt is his new default strategy, a made-up fiscal crisis to rationalize the painful cuts he vowed to avoid.

No, this province isn’t bankrupt. But this budget is.

Martin Regg Cohn is a columnist based in Toronto covering Ontario politics.

https://www.thestar.com/politics/political-opinion/2019/05/20/revealed-doug-fords-post-budget-plan-to-declare-bankruptcy.html