When the Ontario Minister of Finance Comes Calling: Defending Public Services

The Star and the Globe reported today on a meeting called by the Ontario Ministry of Finance for tomorrow with public sector labour leaders on the government's proposed compensation freeze for unionized workers.

• The Star hints at an issue with this process: it is being started in the dog days of summer, when the union membership is on vacation. A coincidence? Maybe not.    Moreover, the Liberals are up for election in the fall of 2011, and the closer we get to that date, the more hesitant the Liberals will be about getting into trouble with labour. And the more leverage the unions will have. 

• The Star reports that “Municipalities, which handle their own wage settlements, will not be represented.” at Tuesday’s meeting between public sector labour leaders and the Ontario Ministry of Finance.

• The Star also reports that the Ontario government will save $750 million by next year through its proposed wage freeze. Whoopee. The government took $3.4 billion off last year’s deficit estimate the day before the 2010 provincial budget, as the economy was performing better. And recently finance Minister Dwight Duncan was bragging that the deficit will fall further (see here) as growth is improving. No one, as far as I know, is making any dire threats about Ontario’s credit rating.

• There appears, in other words, no compelling economic need for the freeze. Indeed, some mainstream economists fear that public sector austerity will rekindle the recession (see here), which would, in turn, drive the deficit much, much higher .

• My sense is that this is more of a political play, to win over some Tim Hudak voters and keep business happy. Which also makes me think they won’t be as dug in on this as if they might be if there were more profound economic reasons at play.

• The government has framed the compensation freeze as a way to save public sector services. From where I sit on the health care file, however, I don’t see too much ‘saving’ going on. Not so far anyway.

The Globe article on this issue is here.


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