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	19.7	17.3	15.9	74.2
2013 April	19.3	14	13	9.8	56.1
Reduction in Deficit (billions)	2	5.7	4.3	6.1	18.1

Since the 2012 Budget, the government has repeatedly cuts its deficit forecast for 2012-13.  It started this year estimating a $15.2 billion deficit (just slightly lower than it estimated in 2010, as noted above). It now puts the deficit at a whopping $5.4 billion less.

That is one mighty big error over the course of just one year.

To put it in perspective, the government only hoped to save $8.8 billion over 3 years through the wage freeze and concessions it proposed for public sector workers last summer.

The attack on collective bargaining by the McGuinty government led to a lot of trouble and disruption for savings that were being achieved largely through other means -- and at a faster rate.

Despite the consistent write down of the deficit during the course of the fiscal year, the McGuinty /Duncan government (for political reasons) intensified its attacks on public sector workers and collective bargaining, changing its position last summer from demands for a two year wage freeze to one where it demanded concessions (as well as the wage freeze).

Perhaps the Wynne government has dialed it down a bit on free collective bargaining.  But will it do likewise on public services? Comments from the new Minister of Finance, Charles Sousa, suggest otherwise.  He told  (who else?) a corporate crowd yesterday that he would deliver a funding increase of  less than 1%.  

That would actually be a cut from Dwight Duncan's budget last year.  There, total spending was supposed to increase 1.4%  (with program spending budgeted to increase 1.2% --see Budget table 2.31 ). In the previous year, 2011-12, total spending increased 2.8%, and in 2010-11 spending increased 4.9%.

With the population growing about 1.15% per year and inflation estimated for this year and the next two at 2% by the Ontario government, a spending increase of less than 1% would mean a very significant real decrease in public services --  even assuming ambitious efficiency gains.

Indeed, the nominal funding increase proposed for 2013-14 is worse than last year under Dwight Duncan. And if inflation does goes higher...

Photo: ammiiirrr