Skip to main content

The end of provincial public sector austerity in Ontario?

The experts appointed to review the claim by the Auditor General that the surpluses in the teacher and civil servant pension plans cannot be counted as government assets have reported.  

Importantly they have sided with the government and against the Auditor General, Bonnie Lysyk.

Lysyk's pension surplus accounting policy required the government to add $10 billion to the provincial debt and $1.5 billion to the deficit last fall. Only then did she approve the final provincial government books for 2015-16 (the Public Accounts).  

The government estimates this policy would add $2.2 billion to the deficit this fiscal year (2016-17).   Indeed, according to the Finance Ministry's Fall Economic Statement the extra program expense associated with this policy is increasing at a rate of $600 to $900 million per year through until at least 2018-19.  The Ministry of Finance reports that this policy would add $2.8 billion  in program expense in 2017/18 and $3.7 billion in 2018/19. 

Ontario fiscal outlook improves


But if this policy is over-ruled, the government could actually spend those billions on public programs (like health care services) and not fall back into deficit. 

This is significant as getting out of deficit has been this government's key measurement of their  own success as fiscal managers -- at least in their public statements.


So the big news (reported by the Toronto Star) is that Treasury Board president, Liz Sandals, now says, for good or ill, that the government is "committed to implementing the advice of this independent panel and will use it in preparing the province's financial statements."   

If so, and if this accounting policy is applied to this fiscal year, $2.2 billion should come right off the top of the deficit. Given that this government always put significant padding into their Budget deficit estimate,  that they reduced the deficit by over $5 billion last year and that they are  (nominally) planning
only a $700 million reduction this year, it is at least possible that the entire deficit will be eliminated this year -- one year earlier than planned.  

Even without this accounting change, the government claimed that they would be deficit free in 2017/18 and 2018/19. So they would be deficit free even with  $2.8 billion in extra program expense  in 2017/18 and $3.7 billion in extra program expense in 2018/19 due to the Auditor General's pension accounting.  

Program expense is $125.3 billion this year. So saving $2.8 billion in program expense should free up 2.23% of program expense for other purposes.  The government was already planning a $2.4 billion (1.92%) increase in program expense for 2017/18, so this, in effect, more than doubles their room.  

Ontario fall economic outlook
 
In total, simply based on their own statements to date, the government has room for $5.2 billion in program expense increases -- over a 4.1% increase.

If provincially funded programs did get a 4.1%  increase, that would be a modest break with the harsh public sector austerity since the recession in 2008-09.  That could help the Liberal re-election campaign in 2018.  It would not however match the widely accepted cost pressures faced in health care.

Of course, just because they have the space, doesn't mean they will use it for good.  For example, the government could blow the cash on tax cuts for the wealthy.  The tax cuts they have provided to date for corporations amount to tens of billions of dollars and there is little doubt that corporations have big plans for all the new found cash. 

Another issue is what position the Auditor General will take. Notwithstanding, Sandals declaration that the government will implement the advice of the expert panel, the Auditor General still has to sign off on the Public Accounts for 2016/17 which are due in September.   

Whatever the Auditor's conclusions, she does not sign off on the Budget (upcoming in the next month or so) and the 2017/18 Public Accounts won’t go to the Auditor General until after the next election.

Comments

Popular posts from this blog

Public sector employment in Ontario is far below the rest of Canada

The suggestion that Ontario has a deficit because its public sector is too large does not bear scrutiny. Consider the following. 

Public sector employment has fallen in the last three quarters in Ontario.  Since 2011, public sector employment has been pretty flat, with employment up less than 4 tenths of one percent in the first half of 2015 compared with the first half of 2011.


This contrasts with public sector employment outside of Ontario which has gone up pretty consistently and is now 4.7% higher than it was in the first half of 2011.



Private sector employment has also gone up consistently over that period. In Ontario, it has increased 4.3% since the first half of 2011, while in Canada as a whole it has increased 4.9%.







As a result, public sector employment in Ontario is now shrinking as a percentage of the private sector workforce.  In contrast, in the rest of Canada, it is increasing. Moreover, public sector employment is muchhigher in the rest of Canada than in Ontario.  Indeed as…

The long series of failures of private clinics in Ontario

For many years, OCHU/CUPE has been concerned the Ontario government would transfer public hospital surgeries, procedures and diagnostic tests to private clinics. CUPE began campaigning in earnest against this possibility in the spring of 2007 with a tour of the province by former British Health Secretary, Frank Dobson, who talked about the disastrous British experience with private surgical clinics.

The door opened years ago with the introduction of fee-for-service hospital funding (sometimes called Quality Based Funding). Then in the fall of 2013 the government announced regulatory changes to facilitate this privatization. The government announced Request for Proposals for the summer of 2014 to expand the role of "Independent Health Facilities" (IHFs). 

With mass campaigns to stop the private clinic expansion by the Ontario Health Coalition the process slowed.  

But it seems the provincial Liberal government continues to push the idea.  Following a recent second OCHU tour wi…

Hospital worker sick leave: too much or too little?

Ontario hospital workers are muchless absent due to illness or disability than hospital workers Canada-wide.  In 2014, Ontario hospital workers were absent 10.2 days due to illness or disability, 2.9 days less than the Canada wide average – i.e. 22% less.  In fact, Ontario hospital workers have had consistently fewer sick days for years.

This is also true if absences due to family or personal responsibilities are included.
Statistics Canada data for the last fifteen years for Canada and Ontario are reported in the chart below, showing Ontario hospital workers are consistently off work less.
Assuming, Ontario accounts for about 38% of the Canada-wide hospital workforce, these figures suggest that the days lost due to illness of injury in Canada excluding Ontario are about 13.6 days per year ([13.6 x 0.68] + [10.2 x 0.38] = 13.1).

In other words, hospital workers in the rest of Canada are absent from work due to illness or disability 1/3 more than Ontario hospital workers. 

In fact, Canad…