Hugh Mackenzie
Huntsville Doppler
What is the plan, Premier Ford?
Last week, I wrote about the huge federal debt we are facing going in to an election year; a deficit nearly three times the size Justin Trudeau promised when he became Prime Minister and a balanced budget delayed to 2040, not 2020, as he had committed to. The debt itself now sits at $665 billion. These are not Conservative facts; these are Government facts. I stand by what I said in that column. Federal finances are in a serious mess, endangering our economic future and Justin Trudeau should be held to account for this when the election is held in October.
However, former Huntsville Mayor, Claude Doughty, in a comment to last week’s column made an extremely valid argument when he pointed to the financial mess that Ontario is in. It is at least as big a problem as our Federal debt. As Doughty says, and as I have said on numerous occasions, Ontario has the largest sub-national debt of any jurisdiction in the entire World. There is simply no excuse for that and future generations will pay dearly for it.
What is staggering is that Ontario has been a Province since 1867 and yet 87 per cent of its public debt, that was projected to be more than $348 billion by the end of last year, has been accumulated only since 1990! All political parties must take a degree of responsibility for this. During that period, the N.D.P. were in power for five years, the Conservatives for eight years and the Liberals for 15 years. The Liberals, under David Peterson were also in power between 1985 and 1990 during which time he increased the provincial debt by $10 Billion. To my recollection, the only time a budget was balanced was when Mike Harris was Premier. Kathleen Wynne claimed to balance the budget in 2017 but in fact, $6.276 billion was added to the Provincial debt in that year.
There is one significant difference between the financial challenges faced by the Federal Government and those faced by the Ontario Government. In Ottawa, Justin Trudeau and his government are nearing the end of their mandate, during which he has added significantly to the National debt. He is running out of time to do anything significant about it and indeed has shown little interest in doing so. Doug Ford in Ontario, on the other hand, is just six months into his majority mandate. He did not create the debt or the financial crisis that Ontario faces but he did run on a platform to fix it. He has three and a half years left to do that.
And so Premier Ford, it is a fair question to ask. What is your plan? We know that “Help is on the Way” and that “Ontario is open for Business” but what is your actual plan to eliminate the deficit and significantly reduce our debt? What do you plan to do to get our credit rating back and to make people feel better about our economic future?
The hard truth is that there are no easy answers and there is no alternative to harsh measures if Ontario is to return to the economic engine of Canada that it once was. We have a very deep hole to dig out of. Sunny ways have not cut it in Ottawa and they will not cut it here. We need reality. If Doug Ford’s goal is to be a popular and well- liked Premier over the remainder of his term, he is either going to be disappointed or he will not be doing his job. It is as simple as that. There are too many people who will not like what has to be done, especially when it affects them. “Not in my back yard, they will say”. It’s a populist thing.
During the last six months we have seen some glimpses of what we can expect from a Ford Government. They appear to be on an austerity agenda with some cuts and reduction costs here and there and little new spending. But these are small, ad hoc, measures, that do little if anything to fix the real problem and do not set a pattern for genuine and effective financial reform. What we need, what we desperately need to see, is a Grand Plan.
That plan may come in a Provincial Budget, but it needs to come this year and it needs to spell out long term initiatives that will balance budgets, reduce debt and ensure Ontario’s economic future. There is no more time to waste. Here are just a few things that need to be considered.
- Zero-based budgeting. Every ministry that wants to add a program must cut something equal in value. There is lots of waste in government. Go find it.
- Irrevocable legislation that prohibits Provincial deficits except in a period of official recession. Municipalities are not allowed to run deficits. Why should the Province?
- A special “debt tax”, time limited to say 10 years, on the top two per ent of income earners and used only and solely to reduce Ontario’s debt.
- A one per cent increase in the Ontario Sales tax to meet necessary government expenses in the area of health, education, the environment and infrastructure, without having to go in to deficit to do so.
- A moratorium on public sector hiring, with the exception of some essential services.
- A review of all Government Boards, Agencies, Tribunals and programs, to ensure relevance, need and effectiveness.
- The sale of all unneeded Government real estate. There is a lot of it.
- Consider the sale of the LCBO. It would provide a huge capital benefit and still be subject to tax on alcohol.
- A Manufacturing and Economic Development plan that really does show that Ontario is open for business.
These are indeed harsh measures and to some, they will actually be hurtful. They may even defeat a government, if their principles are more important than the retention of power. But these or other initiatives like them, are what will be needed if Ontario has any chance at all of putting its financial house in order.
It is worth repeating what Claude Doughty wrote, “The legacy we leave the next generation is absolutely unconscionable.” Unless stringent measures are taken now, he will be dead right. That is why, Premier Ford, we need a plan.
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Hugh, i like many of your suggestions for the Ontario budget. But I don’t believe that it’s the top 2% of income earners who should be liable for the “debt tax”. Rather the 2% should be based on net worth; as the major income earners are extremely clever at using loopholes, losses from former years, etc. to considerably reduce their taxable income. Also, raising the GST to 14%, after it has painstakingly been reduced from 15% to 13% affects everybody. I would prefer to see an increase in “sin” taxes on cigarettes, alcohol, and marijuana. And gasoline taxes could be reduced in areas without mass transit in favour of increases in areas with mass transit. That could be accomplished as a “zero sum” measure, and should benefit the environment as well.
I agree with you Jim Boyes. We do need a sensible and doable plan! Our current Finance Minister is one for the job but, at this time his hands are tied.
Liberals represent socialism, thus every one pays to help the folks that struggle financially. There is no regard by the Liberals to recognize that you cannot pay bills continuously by just borrowing more. Folks that make sacrifices to build successful organizations should always be encouraged and not be expected to pay for others that were afraid to invest.
If I were Premier Ford I would select and launch a blue ribbon commision made up of the best and brightest minds in business and economics community. The Minister of Finance would be a member but with only one
vote. Their mandate would be to analyse Ontario’s fiscal situation and come back with recommendations for a path forward and for a budget. The commision would be required to report to the legislature in 6 months. The expectation would be that the recommendations would be implemented in detail and if not, justification and an alternate proposal would be required from the government within 60 days. Legislation would be promised and enacted.
Ford should get the best and brightest working on our behalf. The present elected braintrust (as with most) needs help.
The situation is dire. We need the very best expertise available. Politics should be subservient to the importance of the task.
Doug Ford, please do the right thing.
It is hard enough to cut budgets when you follow a government who took reasoned sound judgements in preparing and executing a small deficit budget with an attainable goal of balancing future budgets. To have a government that had absolutely no intention of ever balancing a budget, who spent money implementing non sustainable, new heavily government funded programs and to have all of these policies touted by the media as going in the right direction, is absolutely absurd.
If Ford can get even a rediculousley small bandage on this body that has lost all of its limbs, it will be a miracle.
Regarding the great Trudeau (not) reduction in debt to GDP it is just a blip on the Trump effect in the US. The Trudeau mess with China, Saudi Arabia and India as well as what was lost in the US/ Mexico deal and the pipeline fiasco will soon be realized in those GDP numbers. Meanwhile the federal debt is growing in leaps and bounds and if Canadians are foolish enough to give Trudeau another mandate in 2019 the Federal Liberals will surely surpass new heights for deficit spending.
Hugh, with the exception of your mistaken assertions about the federal debt (which I’ll return to in a moment), this is a very thoughtful column.
Ontario’s provincial finances are in a parlous state, due in no insignificant measure to the mismanagement of Ontario Hydro over the past three or four decades. Who’d have thought we’d see Ontario downgraded by Standard and Poors while Quebec’s rating is upgraded and now is better than Ontario’s. Unprecedented in living memory.
Ontario’s debt-to-GDP ratio (a key measure, and a big factor in the S&P ratings) has climbed from about 29% in 2000 to an almost unprecedented 41% today. Mr Ford will have his work cut out for him- the next few years are going to hurt.
As to Ottawa, you are telling only half the story. The half that Andrew Sheer likes to tell.
And it is quite wrong to assert that the sky is falling. Yes, there’s a deficit, and yes we’d all rather there wasn’t. But let’s get some perspective. Canada’s debt-to-GDP ratio has fallen from 37% during Mr Harper’s last year in office to about 31% today. That’s one of the reasons Standard and Poors gives Canada’s federal debt a AAA rating-among the highest available.
Indeed, if Canada’s federal finances under Mr Trudeau are “a mess”, why is it that sophisticated investors in the bond market are prepared to lend Ottawa billions for 30 years at about a 3% rate of interest? The key is the debt-to-GDP ratio, and Canada’s is quite healthy despite what some would like to lead us to believe.