More cuts to Ontario deficit coming in January

Dwight Duncan

The Ontario government's recent Fall Economic Statement retroactively confirmed that the 2011-12 deficit was $2 billion less than set out in the 2012 provincial budget. It also lopped $400 million off the 2012-13 deficit.

Our economic elites thought this was no big deal -- there was a "lack of significant progress" the TD Bank said. (See TD's report here and the chart "Fiscal profile largely the same for the Ontario government" )

But just those cuts in the deficits are equivalent to $1 billion more than the $1.4 billion the government hopes to save through the first year of its "provincial compensation framework" announced in July.

The $2.4 billion reduction in the Fall Economic Outlook is just the latest in a long series of reductions since the 2010 Budget -- $13.5 billion in total.

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
2012 Fall Economic Statement	19.3	14	13	14.4	60.7
Reduction in Deficit	2	5.7	4.3	1.5	13.5

Despite this (and despite that it was apparent the major part of the government's planned compensation savings were already achievable) Premier McGuinty and Finance Minister Dwight Duncan launched their fateful legislative attack on collective bargaining in the broader public sector.

More Deficit Cuts?

Earlier this week, outgoing Finance Minister Duncan (while pleading for the new Liberal leaders to stick with his policies) suggested that he will announce new deficit numbers in January. This will likely continue Duncan's tradition: we will be told the deficit is smaller than previously announced. (Despite growth and little new spending, Duncan's Ministry somehow estimated that the deficit will be $1.4 B higher this year than last year in the recent Fall Economic Statement.)

This will also allow Duncan to grab credit for a reduced deficit before he goes, likely shortly after the January 26 leadership contest vote.

But don't expect the Duncan (or the banks) to suggest that any adjustment in the deficit should mean any adjustment in policy on free collective bargaining.

Comments

Huge cuts in public sector wages predicted

The Ontario Financial Accountability Office (FAO) says that, with inflation, real wages in the public sector will decline 11.3% over the three year period 2021/2 - 2023/4 . This would radically deepen the trend towards lower wages during the last ten years. The FAO reports that since 2011, the average annual salary for the Ontario public sector employees (defined here as employees of schools, colleges, provincial government, provincial agencies, and hospitals) has increased by $10,385 -- or 1.6 per cent on average annually. This is the lowest increase of all the sectors and lower than inflation, which averaged 1.8 per cent per year. Over the ten years that would be about a 2% pay cut. The FAO reports that wage settlements were the lowest in the provincial public sector over the last decade: Hospital Wages Especially Challenged: The FAO predicts hospital wages will increase even less than in the public sector -- just ...

Too many public sector workers in Ontario?

Opponents of public services often try to portray the public sector as having grown disproportionately. In fact, since 1976, the number of public sector employees has not quite kept pace with the population. In 1976, the number of public sector employees in Ontario as reported by Statistics Canada averaged 830,800. By 2012, the number had increased to 1,330,700 -- a 60.2% increase. That sounds like significant growth -- true. But the population has increased from 8,413,779 in 1976 to 13,505,900 in 2012, a 60.5% increase. In other words, population growth has run slightly ahead of the growth in public sector employment. In 1976, close to 10% of the population worked in the public sector. It stayed pretty much this way until the Mike Harris government came to power when it dipped below 9%. It returned close to the historical range in the last six years or so, declining in 2012 to below the 1976 averag...

Are health care administrative expenses out of control in Ontario?

The Progressive Conservative government has justified its health restructuring plans with the claim that administrative expenses are much higher in Ontario than in Canada. When introducing the reforms, health minister Christine Elliott claimed , “Over the last five years, Ontario has spent 30% more than the Canadian average in administrative expenses on its health care system.” Elliott did not indicate her source of information. Presumably, however, the Progressive Conservatives are referring to the CIHI simplified and user friendly “ Your Health System ” graphs. Those graphs show “administrative expenses” in Ontario at 5.8% in Ontario while it is 4.5% in Canada. This CIHI measure is actually fairly narrowly defined. It is the percentage of “the legal entity’s” total expenses associated with the administrative, finance, human resources and communications functional centres. However “the legal entity” used for this estimate is [1] only...

Defend Public Healthcare

Search This Blog