ONTARIO LIBERALS’ ‘ BALANCED’ BUDGET
UNIONS OFFERED SUCH A SWEET DEAL EVEN THE WORKERS COULDN’T BELIEVE IT
The key word for Ontario’s government, boys and girls, is “balanced.” “Balanced” as in “We have balanced the budget, therefore any additional spending is justified.”
That’s the explanation offered by Premier Kathleen Wynne in revealing the government’s surprise offer of a generous contract extension to Ontario public servants.
“One of the reasons that we have been able to come to this position now where we are able to balance the budget, where we are able to make investments, is that we’ve worked very well with our labour partners,” Wynne said.
The budget isn’t actually balanced. In May, the Liberals were able to declare they had finally finished their run of annual deficits by using accounting tricks and one-off asset sales to hide this year’s shortfall. They still spend far more money than they have. This was confirmed after the budget release by Ontario’s financial accountability office, which reported that, once next year’s election is over, deficits will start rising again, to $ 6.5 billion by 2022, while the net debt soars $76 billion to more than $390 billion, after already doubling under Liberal rule.
“Beyond 2017-18, the deficit is projected to deteriorate steadily due to rising expenses and moderate revenue growth,” wrote Stephen LeClair, head of the independent agency that monitors provincial finances.
But the Liberals know that Ontarians pay little attention to such warnings as long as there is no sign the associated costs, which are significant and growing, will land on their doorstep in the immediate future. The 13-year Liberal reign in Ontario has been one long proving ground for the theory that people can be bought with their own money, and pay little heed to the burden they heap on future generations. They also know that if they claim to have balanced the budget often enough — despite the fact that it’s not true — voters may be willing to ignore the evidence and once again cast their ballots for Wynne and her colleagues.
Wynne is betting heavily that this is the case. Since her personal standing with Ontarians sunk close to single digits — Donald Trump’s popularity with Americans is three times as high as Wynne’s with Ontarians — the premier and her party have been on a spending spree of startling proportions, predicated on the fiction that the budget is balanced.
The latest goodie, an offer to increase public service pay every six months over a four- year contract extension, was so unforeseen it even surprised union boss Warren “Smokey” Thomas, who declared himself “kind of shocked the government actually made us any kind of an offer.” He was pleasantly surprised that the offer came with a number of other extras, and no demands for concessions: just a flatout freebie offer, which will protect the Liberals from any danger of union disquiet while they run for re-election a year from now.
Thomas said the offer is “unprecedented,” even though the union for corrections officials immediately groused that it still isn’t enough, but there’s no reason he shouldn’t have seen it coming. The Liberals had already placated the province’s ever- grumpy teachers unions with a similar extension, preventing any pre- election disruptions. And Wynne has headed a binge of spending announcements in the gap between the budget speech and the legislature’s summer break. New rules to make it easier for private- sector unions to organize. A hike in minimum pay to $ 15 an hour. Free prescription drugs for children and youths. A pilot program offering a guaranteed minimum income. Additional subsidies to temporarily bring down hydro bills. Legislation guaranteeing 10 sick days a year without having to provide a doctor’s note. A pledge to provide universal childcare.
It all comes at enormous cost. The childcare expansion is budgeted at $ 1.6 billion ( some of which will presumably come from Ottawa’s deficit rather than Ontario’s). The hydro cut will be reversed and begin rising again in 2022, doubling monthly bills within a decade. Ontarians will eventually spend $45 billion over the life of the plan to save $24 billion over the short term. The Hydro One selloff needed to hide current overspending will shut off the province from billions of dollars in ongoing revenue. The cost of the Liberal drug plan is not known — they government rushed it out to counter a proposal by the New Democratic Party without attaching a price tag. Interest on the debt already amounts to $1 billion a month and will only grow as borrowing resumes, especially if interest rates begin to rise.
None of this has been enough to convince the government to slow the onslaught of spending. The reason is self-evident: the Liberals believe their hopes of survival depend on luring votes away from the NDP, just as Prime Minister Justin Trudeau successfully outflanked the federal NDP in defeating Stephen Harper’s Conservatives. With that in mind, Wynne has pushed relentlessly to the left, establishing Ontario’s Liberals as perhaps the most left-wing regime in the country, with the possible exception of the new NDP/ Green alliance in British Columbia. Trudeau’s pledge of balanced budgets was quickly abandoned once he took office, and Wynne’s assurances are likely to dissolve just as quickly; winning reelection is everything to the Liberals, with provincial finances merely a tool to help achieve it.
The election is a year away, yet the Liberals have pledged so much spending it makes one wonder what more they could possibly have to offer once the formal campaign begins. How far into deficit can they go while still pretending to “balance” a budget that depends so heavily on borrowing?
Words don’t mean much to Wynne’s Liberals. Perhaps they’ll simply legislate a new meaning for the word “balanced.” The good news is, they wouldn’t have to borrow any money to do it.