2/4/13

Attack on free collective bargaining political, not fiscal


In December, it was predicted that outgoing finance minister Dwight Duncan would   reduce his deficit forecast just before his departure (for Bay Street).  Duncan had somehow estimated in his fall economic statement that the 2012-3 deficit would be  $14.4 billion, i.e. higher than the 2011-12 deficit  -- and even higher than the 2010-11 deficit!

Sure enough, Duncan lopped another $2.5 billion off the deficit in January.

In 2010, the McGuinty / Duncan government started its campaign for a wage freeze in the provincial public sector, citing the state of the public books.  At that time they had estimated deficits totaling $74.2 billion from 2009/10-2012/3.

Deficit (in billions of dollars)
2009–10
2010–11
2011–12
2012–13
Total
2010 Budget
21.3
19.7
17.3
15.9
74.2
2013 January
19.3
14
13
11.9
58.2
Reduction in Deficit
2
5.7
4.3
4.0
16.0

However, these proved unrealistic -- the actual deficits are now put at $16 billion less.  (This is a change from $13.5 billion less as of the 2012 fall economic statement.)

Despite the decline in the deficits, by the summer of 2012 the government increased their demands on broader public sector workers.  A wage freeze would no longer do -- now it had to be a wage freeze plus significant financial concessions (e.g. cuts to sick leave and retirement pay-outs).  The government claimed that their plan would save $8.8 billion over three years -- i.e. much less than what they had already paired from the deficits since they started their wage freeze campaign in 2010.

The government was quite prepared to attack free collective bargaining to get the concessions they desired, despite the fact that  major unions opened bargaining with a proposal for a wage freeze -- a freeze which would have accounted for much of the government's savings goal.

So the long and the short of it is this: in the summer of 2012 the government increased their concession demands even though their fiscal situation was much better than they predicted when they started their wage freeze campaign in 2010. Moreover, most of the savings they were aiming for were already conceded by the unions. Worse, despite this, the government moved from free collective bargaining to legislative compulsion to achieve their plans.

It may not have made much fiscal sense, but the attack on free collective bargaining did respond to the heckling from employers and the Progressive Conservatives.

The attack on free collective bargaining by the McGuinty / Duncan government was political, not fiscal.

Nevertheless, as they slink from the public stage, McGunty and Duncan may not think the attack was so opportune now.

Footnote: Part of the year end savings recorded by the Finance Ministry in the January statement was a reduction in health care spending of $308.6 million. 


Photo: Dwight Duncan, Ontario Chamber of Commerce

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