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Showing posts from April, 2013

Ontario Finance Minister plans cuts in public services

The Ontario government just lopped another $2.1 billion off their 2012-13 deficit estimate, cutting it from $11.9 billion (as of January) to $9.8 billion. This means that since 2010 when they started their public sector austerity drive, they have now cut their deficit estimates by $18.1 billion.

Deficit (in billions of dollars) 2009–10 2010–11 2011–12 2012–13 Total 2010 Budget 21.3

Are Ontario P3 projects plagued by corruption?

A commission of inquiry has heard that SNC-Lavalin deliberately went around Quebec's political party financing rules, leading to a flurry of donations to the governing Quebec Liberal Party in 2009. The donations came as the engineering firm was bidding on a major hospital construction project, the media reports.

What is not reported, however, is that this is a privatized P3 project.

One of the biggest in fact. These privatized P3 projects are designed so private sector corporations get their mitts on a much larger share of the booty than they would under normal procurement (e.g. billions of dollars in financing for the projects).

Former SNC-Lavalin vice-president, Mr. Yves Cadotte said SNC-Lavalin knowingly reimbursed its senior staff for their political donations. (Corporations are not allowed to make donations, or to reimburse their executives for their donations to political parties in Quebec.) SNC-Lavalin employees gave $101,200 to the Quebec Liberals in 2009, just a…

Public sector wages lag private sector

Conservatives often suggest that public sector settlements are out of whack with private sector settlements.

In fact, the evidence from Ontario over the last couple of decades proves the opposite. Public sector settlements have fallen behind private sector settlements.  Here is the data from the Ontario Ministry of Labour:

Percent increase Annual average  increase Public Sector Settlements Annual average increase Private Sector Settlements 1990 6.8% 6.3% 1991 5 4.6 1992 2.6 2.7 1993 0.5

Ontario P3 fiasco: $90 million cost to finance $59 million loan

The majority of the costs reported by the Auditor General for the cancellation of the Mississauga gas plant were payments to the U.S. based investment firm that provided financing for the project -- $149.6 million.

The private company doing the project (Greenfield) negotiated expensive financing for the project with this U.S. investment firm -- 14% annual interest. Compared to the cost of public financing, that is through the roof, perhaps 7 or 8 times higher.

The Auditor General confirms this interest rate, and adds that "Penalties for Greenfield’s defaulting on the agreement were heavy: Greenfield would have to immediately pay back all amounts drawn with interest, as well as interest on the full undrawn amount for the full eight-year term of the agree­ment."

Worse, "the OPA (the Ontario Power Authority, which was acting for the government after it decided to cancel the project) was unaware of any of these onerous penalty terms when it signed a November 25, 2011, in…

Secrecy, Privatization & the Dilution of Public Accountability: the Chemotherapy Scandal

Martin Regg Cohn, Queen's Park columnist for the Toronto Star,  expressed his outrage at some length today at the College of Pharmacists.  Apparently, they did not answer media questions about the diluted chemotherapy drug scandal quickly enough.

But he says nothing of the response from the private corporation that actually mixed the chemotherapy drugs That company has -- according to the Star's sister paper, the Spectator -- repeatedly refused interview requests and refers questions to the Ministry of Health and LTC.  Early on, it reportedly threatened legal action if its name was mentioned and suggested the problem lay elsewhere.  As one CEO at an affected hospital said yesterday “They have not been forthcoming, for whatever reason, with a lot of information.”

This illustrates a key difference between public bodies and private corporations -- the former are expected by the public and the media to be open, the latter, not at all. 
So when you privatize public services, expec…

Public sector employment in Ontario falls short of other provinces

Yesterday, I noted that public sector employment in Ontario has declined as a percentage of total employment. But public sector employment in Ontario is also low when compared with the other provinces.

In 2012, public sector employment was 19.6% of all classes of workers in Ontario (public sector, private sector, and self-employed).  Canada-wide, however, the average is 20.6%.   In all other provinces except Alberta and British Columbia, public sector workers are a bigger part of the workforce. 
Public sector workers are also a bigger percentage of the population in all other provinces, except Alberta and British Columbia.  
If we had the same percentage of the population working in the public sector as the Canada-wide average, we would have another 65,000 public sector jobs in Ontario.  The same would be true if we had the same percentage of jobs in the public sector as the Canada-wide average.   
Finally, at 65% of the workforce, private sector workers make up a bigger percentage o…

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 average.
This likely understates the decline in public service provided to the p…