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Wage freeze rationale fizzles as Ontario deficit shrinks (retroactively)

Of the provincial deficit and Dwight Duncan, the provincial Finance Minister, the Toronto Star suggests that the “spectre of looming shortfalls … helps bolster Duncan’s case for a planned wage freeze for more than 1 million public servants, including nurses, teachers and bureaucrats.”

Well, that argument is weakening.

The Public Accounts for the province have now come out for 2009-10 and the deficit is a lot smaller than Finance Minister Dwight Duncan and the Liberal government forecast. In fact, another $2 billion was lopped off the provincial deficit.

The Liberal government also reduced its deficit estimated by $3.4 billion the day before the March provincial budget. That makes the 2009-10 deficit $5.4 billion less than the Liberals had estimated it to be half way through the year.

(When I see discrepancies this size, it does make me wonder if I've put too much faith in Finance Ministry forecasts.)

In any case, the government will not get one-tenth of $5.4 billion through its proposed public sector compensation freeze this year. Indeed, they won’t get one tenth of the $2 billion figure.

One might think that this good news on the deficit might cause the government to reconsider the wage freeze.

But, alas, there is not much sign of that, yet.

While there is not much of an economic case for attacking public sector workers, the Liberals appear to think there are some political gains to be made -- apparently, it is all to harvest a few votes from Tim Hudak and the Progressive Conservatives.

Our job is to give them reason to review that (rather cynical) political calculation.  Without any pressing economic necessity,  a little political pressure might just tip the balance. 

Are the Liberals, for example, willing to introduce legislation and attack free collective bargaining to get their compensation freeze? It's not clear, especially if the Liberals are squeezed.

One thing's for sure: that plan didn't help Bob Rae too much when he was premier. He burnt his bridges with much of the labour movement when he attacked free collective bargaining in the public sector.  And that was when the deficit was a much larger percentage of the economy and the economic rationale a bit more credible.


  1. Doug says: "While there is not much of an economic case for attacking public sector workers..."

    Have you forgotten about the $212 billion debt? Sound like a mighty good economic case for "attacking" public sector workers.


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