WARNING: What follows is another axe-grinding session regarding one of our greatest irritants: big government and our politicians’ inabilities to control spending and cut into the ever-growing, bloated bureaucracy.
The last few weeks have brought into focus, once again, how our Canadian elected officials have learned little from the fiscal mismanagement of many of the countries in Europe, not to mention the economic mess south of our borders. Both the federal and Ontario budgets were inadequate responses to the serious financial challenges Canada faces. The federal Conservatives delivered a milquetoast approach to government spending and public sector cuts, rather than the definitively conservative response that was required. And, ignoring the siren calls of restraint, the Dalton McGuinty’s Liberals simply continued to dig Ontarians into a deeper, larger debt hole.
Here are some points of fact about the recent budgets that signal those storm clouds on our Canadian horizon have darkened and become ever-more ominous.
- The $5-billion cut from departmental budgets is, in reality, less than 2.0 per cent of program spending – not 12% reduction (in real spending per capita by fiscal 2017.) Finance Canada’s bean counters stayed up many nights to bake up this 12% figure – adjusting for inflation and population growth to 2012 and counting all previously announced savings.
- The announced 12% (2%!) cut is applied to the all-time, single year spending record set by the Conservatives in 2010, when spending rose more than $37-billion in a single year. (One must hope the government can find cuts from these uncontrollable increases.)
- Program spending under the successive Harper Governments has risen from $175 billion to $243 billion – a 40% increase in 6 years. Each year, the government has run a deficit and, today, the national debt is now more than $580 billion.
- Andrew Coyne of the National Post points out: “All that the Tories are proposing to do is to roll back some of the increased spending that they themselves introduced. The public service from which the Tories pledge to trim 19,000 employees is the same one to which they added more than 30,000.”
- Barbara Yaffe of the Vancouver Sun writes of the bloat in Ottawa: “Call it the civil service cycle. Ottawa has been growing and shrinking its workforce as though playing an accordion. And taxpayers should be furious.”
- Yaffe’s research: The firing and hiring Ottawa-style is costing Canadians BIG TIME. Canadians today are paying cumulative severances since 1995 to a group equivalent in size to the population of Kamloops, BC – about 70,000. In the private sector, a laid-off worker might get two weeks severance pay for each year with the company. Ottawa is expected to offer almost six months’ pay after just one year of service, plus cash to go back to school.
- Here are the numbers: Under Chretien, bureaucracy cuts from mid-1990’s to 2000 were 40,000 total. Then, in 2000, the Ottawa payroll went back up 19,000 in one year. In the decade following 2000, the core public service (excluding the RCMP and military) grew by 34 per cent. When military and RCMP personnel are included, growth in the overall public service was 25 per cent. That compares to Canada’s population growth since 2000 of 13 per cent.
- With a deficit of nearly $16 billion this year, Finance Minister Dwight Duncan stuck with a Liberal fiscal plan to run deficits for another five years (until 2017/18). These deficits will increase Ontario’s debt to more than $315 billion from $238 billion today — this after the debt has already increased by over 70% since the McGuinty Government took office in 2003.
- In this Liberal fiscal plan, remarkably, there is no planned cut overall government spending. To balance the budget by 2017/18, the McGuinty Government banks on revenue growth forecasts averaging 3.7% annually. On the spending side, Duncan proposes to hold program spending growth to an average rate of 0.7% (both projections totally unrealistic!). Consider last year’s Ontario budget promised to hold program spending growth to 0.4% for 2011/12, yet spending has increased 2.5%. This same government increased program spending at nearly double the rate (6.3%) of economic growth from 2003/04 to 2011/12.
- In some of the government’s big ticket areas, spending will increase significantly over the next three years: health care of 6.3%, in K-12 education of 5.2%, and in social services of 8.0%. (With these increases, holding overall spending to an average of 0.7% is out of the question.)
- As a result of the budget, credit agencies have move quickly to criticize the Province’s fiscal plan. Moody’s downgraded the Province’s credit rating and Standard & Poor issued new warnings. These credit downgrades will affect Ontario’s cost of borrowing – which means more money to service our growing costs of government and our debt.
- If there were a Ministry of Debt in the Province of Ontario, it would be the third largest ministry with a budget today of $10.6 billion – our interest payments on our debt.
- Christina Blizzard of Sun media sums up the criticism of McGuinty’s Liberal budget: “His party came out with an irresponsible, unsupportable budget that didn’t tackle the major causes of his overspending – full-day kindergarten, subsidies on hydro bills, tuition cuts, etc. Economist Don Drummond provided McGuinty and Finance Minister Dwight Duncan with a road map to get us out of their mess. They threw the map out the window – and we’re heading over a cliff.”