Promises are easy, planning is hard
After a dynamic summer, Doug Ford faces the toughest question of his premiership: What next?
He was elected on a plan that promised a series of specific actions. Most of the easy ones have been taken, and you can only talk about buck-a-beer for so long. For Ford, “promise made, promise kept” sounds so good he must be wishing he made more easy commitments.
The challenge now is that there was no overarching plan to govern. We know little about the Ontario Progressive Conservative Party’s fundamental priorities, what they will spend money on, and what they will cut. At this point, they probably aren’t sure either.
The biggest thing Ford has done is eliminate the cap-andtrade greenhouse gas emissions plan. That proved to be easier and cheaper than imagined, but the tough and expensive stuff lies ahead.
The PCs’ primary challenge is finding an acceptable way to bring the budget back to balance within their four-year term. We will get a preliminary glimpse of the state of things in a fiscal update this fall. The Liberals had projected a deficit of $6.7 billion this year, but the PCs won’t carry out all the Liberal campaign promises that were inflating the number.
Unfortunately for the new government, its own deficit will look worse than what the Liberals promised because the PCs have decided to acknowledge what both the auditor-general and the financial accountability office have contended. The real deficit is $5 billion higher than the Liberals said because they didn’t take into account money borrowed to cut power rates, and counted revenue from pension fund surpluses the government does not have access to.
It might be possible to strike a deal with unions to split the pension surplus and legitimately show some revenue, but that will be tough. It won’t be nearly as tough as coming to grips with the implications of the so-called Fair Hydro Act, though. That’s the one where the Liberals borrowed money to cut power bills 25 per cent. It offers temporary relief, but higher power prices later, when the borrowing has to be paid back with interest. That interest is going to cost $21 billion over the 10-year life of the plan.
It’s probably the stupidest thing the Liberal government did, but the PCs haven’t said how, or if, they will fix it. The options are unappealing. The PCs could keep borrowing, but if they are to balance the books that would mean covering the borrowing costs with tax dollars. What’s the point? The middle ground would be to operate the power system more efficiently and use the savings to reduce borrowing. That would be sensible, but the political payback would be slight because power bills would not decline. Even less politically appealing is avoiding the interest bill by raising power rates. That’s not likely for a government that has promised to cut power bills by an additional 12 per cent.
The book balancing is supposed to take place while Ford cuts taxes, and thus, revenues. He promised a cut of 20 per cent in the second income tax bracket rate, plus lower gasoline taxes, no income tax for minimum wage workers and a refundable 75 per cent tax credit for child care. When fully implemented, these promises will cost $4.4 billion a year.
Ford inherits a health care system with an array of problems, one that delivers less care per dollar than similar systems in many European countries. His big promise was ending hallway medicine, and the tool he has chosen is an expansion of longterm care. Making more beds available in that sector will free up beds in hospitals, but new longterm care homes won’t spring up overnight. The government needs to aggressively deliver on the longterm care promise if it is to see any results during its mandate.
There is also a legacy of bitterness in relations with the province’s doctors. Ford has made overtures to them, but the doctors are unhappy at arbitrary and unilateral fee cuts by the previous government. Satisfying the doctors won’t be cheap.
The PCs have a lot of tough challenges, not the least of which is the substantial skepticism from those who automatically assume this government’s plans are poorly thought out and its motives meanspirited. Ford and his team will need to carefully explain the reasoning behind what they do, and why it constitutes fiscally responsible and pragmatic government.
So far, Ford has shown that he is energetic and not afraid to act. That’s good, but when he seeks reelection in four years, he will be judged on the results he achieves in balancing the budget and improving health care. None of it will be easy.
THESE PROMISES WILL COST $4.4 BILLION A YEAR .