Wage freeze: Is Dwight Duncan gaming the Ontario deficit?

As reported a few days ago, the Ontario government (quietly and) retroactively, revised the 2009-10 budget deficit downwards another $2 billion when it released the Public Accounts.

And as reported way back on July 12 (before any public mention of the current consultations with unions on a compensation freeze), Finance Minister Dwight Duncan had predicted that the 2009-10 deficit would decrease.

But he also predicted that the 2010-11 deficit estimate would be revised downwards too.

“If you're starting off with a smaller deficit for the year ended, presumably if you follow the plan we've laid out, then the numbers will improve down the line — assuming no cataclysmic or unanticipated event”.

While the revision for the 2009-10 deficit has now happened, the revision for the 2010-11 deficit has not. Or at least not yet.

The deficit is now forecast to be higher this year (when the economy is growing) than it was last year (when the economy was shrinking).

I'm not an economist (far from it) but that sounds like a weird world to me.

My guess is that, barring (as Duncan suggested) a double dip recession, we will see a downwards revision of the deficit later this year -- once we get past the current Liberal campaign to freeze wages.

dallan@cupe.ca

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