Social Policy in Ontario

Drummond Report: Higher hydro bills, more user fees urged in sweeping report

Posted on February 15, 2012 in Governance Policy Context

Source: Toronto Star — Authors: Robert Benzie

TheStar.com – news/canada/politics
Published: Feb. 15, 2012.   Robert Benzie, Queen’s Park Bureau Chief

Gloom – or Doom.

Ontarians could face higher hydro bills, bigger school classes, fewer hospitals, more expensive tuition and user fees to protect the future of provincial public services.

That’s the grim message from Don Drummond, chair of the commission on public-service reform.

His two-volume, 665-page report delivered Wednesday is so weighty that a table collapsed when Ontario Provincial Police officers unloaded copies in the media lock-up.

“Ontario faces more severe economic and fiscal challenges than Ontarians realize,” Drummond warned.

“We can no longer assume a resumption of Ontario’s traditional strong economic growth and the continued prosperity on which the province has built its public services,” he said.

“Our message will strike many as profoundly gloomy. It is one that Ontarians have not heard, certainly not in the recent election campaign, but one this commission believes it must deliver.”

While Premier Dalton McGuinty struck the Drummond commission in the March 2011 budget, the need for drastic cuts was rarely if ever broached by the Liberals, Progressive Conservatives or New Democrats in the Oct. 6 election.

All the major parties agreed that the deficit, which sits at $16 billion this year, could be eliminated by 2017-18 relatively painlessly.

Not so, warned Drummond, who projected the deficit would balloon to $30.2 billion in 2017-18 unless spending growth is radically curbed.

As first disclosed by the Star, overall increases must be capped at 0.8 per cent per year through 2017-18.

Health care spending, up an average of 6.3 per cent annually over the past five years, must be held to 2.5 per cent growth.

But Drummond admitted “not one jurisdiction in the world” over the past 30 years has managed to keep health costs to even that annual rate.

Primary and secondary education costs can rise only 1 per cent with colleges and universities going up 1.5 per cent and social programs just 0.5 per cent.

Everything else the government funds must be reduced by 2.4 per cent per year.

“Reform must be pervasive and speedy. The government will need to implement all the reforms we recommend … to restrain the growth of program spending enough to achieve balance by 2017-18,” he said.

With 362 recommendations — 105 on health alone — there is much for McGuinty’s Liberal government to digest.

Senior Liberal officials, speaking before Finance Minister Dwight Duncan was to meet with reporters later Wednesday, confided much of Drummond’s report would be taken under advisement.

Some of its tenets will be introduced in Duncan’s budget next month or are already under way with Health Minister Deb Matthews’ reforms announced two weeks ago.

But Liberal insiders told the Star that the report presents a “worst-case scenario” that could give the government political cover when less dramatic cuts are made later this year.

That is not what Drummond wanted to hear.

“This is not a smorgasbord from which the government can choose only the tastiest morsels and ignore the less palatable,” he said.

“We can all agree that change is disruptive, but the medicine does not go down more easily if it is dragged out over a long period.”

Although Drummond was not allowed to consider tax hikes, he said he “cheated a bit” and found $2 billion in “enhanced revenues” though higher fees and better collection of monies owed the province.

But the lion’s share of the savings he identified came from cutting some of the Liberal government’s most treasured achievements, including:

• scrapping or revamping full-day kindergarten;

• raising the 20-student class-size cap in junior grades to 23 children and increasing the average in junior grades from 24.5 to 26 students and from 22 to 24 in secondary school;

• ending the Ontario “clean air benefit,” the 10 per cent rebate to electricity bills that costs the treasury $1 billion a year;

• cancelling the new 30 per cent Ontario tuition grant for college and university undergraduate students unless the overall post-secondary budget can be kept to a 1.5 per cent rise;

• extending the period municipal social service costs will be uploaded back to Queen’s Park by two years to 2020

• amalgamating some of Ontario’s 151 hospital corporations.

But Drummond urged against “across-the-board cuts,” wage freezes or targets for civil-service job reduction, though he implored the government to be creative.

“Do not hang on to public assets or public service delivery when better options exist. Consider privatizing assets and moving to the private delivery of services wherever feasible,” he said.

That does not mean a fire sale of assets.

“Do not partially or fully divest any or all of the province’s government enterprises – Ontario Lottery and Gaming Corporation, Liquor Control Board of Ontario, Ontario Power Generation and Hydro One – unless the net long-term benefit to Ontario is considerable and can be clearly demonstrated through comprehensive analysis.”

Still, he suggested the LCBO improve its purchasing power and open more stores to generate revenue.

As well, the gambling agency should close one its two head offices — in Toronto or Sault Ste. Marie — as well as one of the two Niagara casinos and allow more slot machines to be installed beyond just at racetracks or existing gaming facilities.

< http://www.thestar.com/news/canada/politics/article/1131820–drummond-report-higher-hydro-bills-more-user-fees-urged-in-sweeping-report?bn=1 >

Tags: budget, economy, Health, ideology, standard of living, tax

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