Getting a handle on deficits, choose the right spending priorities
Making the right choices in getting province’s fiscal house in order
The cheques now rolling out as refunds for the licence-plate stickers are certainly a pre-election gambit, but they’re also the kind of thing you’d expect from a Conservative government led by Doug Ford.
It’s a populist move, one that reduces the financial burden on motorists, who could use a little good news just now given the price of fuel.
While the licensing program serves a purpose, it long ago evolved into a cash cow for successive provincial governments looking to generate revenue. The price of renewing was long divorced from the cost of administering the program, even at the inflated costs of the bureaucracy. However, in the absence of cuts to that bureaucracy or other facets of the government, the result will be falling revenues. Right now, that means larger deficits.
Ford came into power on the cut-the-gravy train. It wasn’t long before he discovered there’d be a fair bit of work involved in scaling back the size of government. Growth continued, and then along came COVID-19, pushing spending into overdrive and putting the boots to revenues. The economy has recovered faster than expected – the latest forecast has revenues $8-billion higher than expected just last fall, with the projected deficit now that much lower at $13.1 billion.
There’s a long way to go, however, before the budget is balanced and the size of government can be curtailed, in keeping with the original mandate.
Getting a handle on spending that provides little or no benefit to most Ontarians – from corporate welfare to bloated public sector salaries – is fine; cutting frontline services and benefits is not. Nor are we served if there are rumblings about corporate tax cuts that enrich a few while reducing government revenue precisely as politicians bemoan blossoming deficits. Such poor decisions are the hallmark of ideologues, especially certain partisans.
There is a debate to be had about taxes and would-be economic fixes. The topics are the subject of short-term thinking, an affliction that’s permeated all facets of our society. Adopting the business model that’s taken hold in the last four decades – today’s stock price, shareholder value and this quarter’s profits above all else – our political system has been shaped by constant lobbying from those who see society through only the lens of finances. It’s what’s made citizens no more than consumers.
Politicians, of course, have a built-in capacity for short-term thinking: the election cycle. They make promises and float policies designed for immediate impact – spend for votes today. That’s problematic in and of itself, as it gives little regard to the idea that actions taken now will have impacts years, sometimes decades down the road.
Making matters much worse, however, is the equally troubling issue of taxation. The promises they make come with a price, but decades of neoliberal lobbying and influence have made taxes a four-letter word, meaning many politicians will try to win votes by promising to spend today while simultaneously pledging to cut taxes. That often means deficits, a situation that’s ideal for politicians intent only on re-election: the bill won’t come due until later, when they’re off living comfortably on gold-plated government pensions.
That kind of thinking is what got us into today’s mess. That the very people who supported tax cuts to corporations even as government largesse filled their coffers are the ones leading the charge for austerity measures – not to themselves, of course – has been lost in the shuffle.
In the course of a few generations, we’ve undone centuries of efforts to create a society based on the common good. Much of the we’re-all-in-this-together ideals that came out of the
Great Depression and the Second World War, for instance, has been replaced by relentless individualism.
Rapid urbanization whereby we no longer rely on family, friends and the broader community – indeed, we may not even know our neighbours – makes us forget just how interdependent we really are. A consumer-based society, pushed by marketing, focuses on individual pleasure. This comes at a cost to the collective ‘us,’ especially when it discussing matters of financing the common good: taxes are seen as taking money away from ‘my’ enjoyment. Increasingly, we’re encouraged to give rein to our natural tendency to look after number one. Couple that with an individual’s capacity to seek immediate gratification, and long-term planning for our collective future becomes even more difficult.
There’s nothing wrong with looking out for personal interests, but we’re in danger of forgetting that most of the middle-class gains of the postwar years stem from socially-driven ideas. In purely economic terms, the collective efforts are the rising tide that lifted all boats – some more so than others, certainly. Today, however, there’s an element that seems hell-bent on undoing precisely the conditions that allowed for the great prosperity now under attack.
Thanks to decades of concerted effort, many people have bought into a set of diminished expectations about the role of government and, more troublingly, the possibilities of shaping a better society. We’ve had democracy reduced to the occasional trip to the polls. We’ve seen government reduced to managerial functions, where debate is constrained to a few wellworn topics. We’ve seen the economy reduced to fiscal policy – deregulation’s the order of the day as the financial services industry sets the agenda. We’ve seen citizenship dumbed down to passive observation, at best.
If we’re going to have a better society we need to think about the future 10, 20, 50 and 100 years down the line. The road we’ve been on for the last three decades, driven by the corporate agenda, has diminished our quality of life. We have to look past dubious vote-buying programs, immediate tax cuts and partisanship.
Long-term thinking is not just for issues such as climate change (another
Ford target), though we’re not prepared to tackle even that issue, despite the consequences. No, it’s all about living for today. But long-term planning is crucial for a host of issues that are clearly part of today’s political reality, encompassing all levels: long-term resource consumption, human migration, transportation demands, retirement and pensions and the like. Our failure to do so has led to rampant consumerism, environmental crises, unchecked immigration, urban sprawl, financial speculation and a host of other ills that plague our economic, political and social systems.
Despite the actions of governments of all stripes across the country – federal, provincial, municipal – there is no bottomless supply of money. Spending today burdens future generations. It doesn’t need to be that way. Cuts can and should be made. There is plenty of bad spending that can be made to go away.
The ideological cuts favoured by Ford could be made to serve the public good if the right choices are made, curtailing the kind of spending that benefits the few in favour of putting the focus on the many.