Defend Public Healthcare

There is already significant concern about the impact on the economy of the $20 billion in annual cuts proposed by the Harper government. These may well be compounded by the cuts that Tim Hudak and the Ontario Progressive Conservatives are proposing.  The Deficit is making them do it, or so their story goes.  (More careful observers might note that this policy prescription echoes the program demanded by big business around the world for years.) So it's interesting to see what is happening in Europe, where dramatic public sector cuts have been ongoing for several years --also as a response to government deficits.  Greece has been at the forefront (so to speak) of this policy and the results ain't pretty. Far from reviving the economy, these cuts have led Greece to three years of recession and successive rounds of new cuts.  Yet another round of cuts was approved by the Greek cabinet  yesterday. Almost every economic indicator is going in the wrong direction,

Once again, the Ontario government has reduced the projected deficit for 2010-11.  This time, they estimate in the provincial Budget that it will be $16.7 billion.  That is $3 billion less than planned in the 2010 provincial budget.  This is just the latest in a series of reductions in deficit estimates emanating from the Ontario government, many recounted in this blog. This year's deficit (for 2011-12) is estimated (suspiciously) at just almost the same amount, despite a growing economy.  So we may well see one more (happy) announcement concerning the deficit before the provincial election in the fall. dallan@cupe.ca

The provincial government weathered this recession better than the previous recession in 1990-91. At the earlier recession the deficit topped out in 1992-93 at 4.4% of the GDP (and 22.9% of government spending and 29.7% of government revenue). In contrast, the provincial deficit topped out in 2009-10 at 3.3% of the GDP (and 16.7% of government spending and 20.1% of revenue). It is perhaps also worth noting that Ontario debt interest payments have remained constant as a percentage of GDP since the early 1980s, and have declined as a percentage of revenue. Moreover, the Ontario government has consistently revised its deficit projections downwards since the fall 2009 statement. Indeed, the government has removed well over $5 billion from its estimate of the 2009-10 deficit. Deficits are falling at the federal level.  In the fall 2010 quarterly update, Finance Minister Flaherty said the country's books will continue to improve, with a small deficit of $1.7 billion now forecast by

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 t

Research by Robert Kavcic of BMO Nesbitt Burns suggests that Ontario deficit numbers will be favorably revised (again), in the near term, due to better than expected economic growth (and job growth). "Ontario saw annualized real GDP growth of 6.8% and 6.2% in the two quarters through 2010Q1, the strongest pace since 1999. Our Provincial Economic Momentum Index (PEMI), made up of 36 monthly indicators, also suggests that activity in the province is growing at a full standard deviation above the trend rate, and points to further upside in real GDP growth in the months ahead.Employment has been a key support to the province’s momentum, sprinting 3.1% in the past year, the fastest rate in Canada and nearly recouping all of the job losses seen during the recession…. Regardless of how growth plays out in the quarters ahead, the recent performance of Ontario’s economy has been substantially better than the Province expected in its FY2010/11 budget.” While the bank report (predictabl