Wynne, Harper: Two peas in a pod
Budget themes: Ontario premier, prime minister both talk of selling assets and holding line on spending
In Thursday’s budget, the federal Conservatives have pledged to hold the line on spending, while relying on asset sales and economic growth to — er, what? That wasn’t the federal budget lockup I just attended? That was the Ontario Liberals? Well I’ll be.
Some sort of mind meld has evidently occurred, some cosmic convergence through which the policies and rhetoric of the federal Conservatives, famously supposed to represent the right of the political spectrum, and the provincial Liberals, famously supposed to represent the left, have ended up looking and sounding almost exactly the same.
Like the Harper Conservatives, the Wynne Liberals have adopted the slow squeeze approach to spending, as a substitute for making choices about what government should and should not be doing. Like the Harper Conservatives, they do so only after having raised spending rapidly in the preceding decade, with the result that, while spending is lower than it was at its peak, it remains higher than at any time before either came to power.
Like the Harper Conservatives, the Wynne Liberals are relatively sanguine about the economy. There are almost identical charts in each budget showing oil prices rebounding to the $70 US range, and downplaying household debt as an issue. Like the Harper Conservatives, the Wynne Liberals depend heavily on asset sales — even the same assets, as in their respective General Motors holdings — to meet their own selfassigned deficit targets.
At the same time, like the Harper Conservatives, the Wynne Liberals are crazy for infrastructure spending — it’s the Building Canada Plan in the Tories’ case, Building Together in the Liberals’ — on the same dubious premise that spending more on transit will solve congestion, and with the same boast of “leveraging” private investment to provide part of it.
Like the Harper Conservatives, the Wynne Liberals are also great believers in governments making “strategic” “investments” in “key” sectors thought to “grow” the economy — the Jobs and Prosperity Fund (Harper Liberal) or Defence Procurement Strategy (Wynne Conservative) — which on closer inspection turns out to mean just about every sector.
Like the Harper Conservatives, the Wynne Liberals are fond of projecting — and taking credit for — spending that is to take place many years from now, under governments that have yet to be born. Each boasts of the tax breaks it gives to manufacturing, in the form of accelerated capital allowances, or small business, in special lower rates. Each believes “entrepreneurship” is a quality that springs to life via multiple programs of government encouragement (see also: “venture capital”). Each has already booked savings from negotiations with public-sector unions that have yet take place.
They even take credit for the same programs: The Canada Job Grant in the federal budget is the Canada-Ontario Job Grant here. And of course, the contents of both were mostly leaked or announced well before the event — budgets nowadays being intended less to reveal than obscure.
There are differences in the two documents of course. The Wynne Liberals are all about climate change, for example — why, there’s a whole sub-section on it, under the chapter heading Creating an Innovative and Dynamic Business Environment — where the federal Conservative budget did not mention it. And of course, the Wynne Liberals are in the throes of creating an Ontario pension plan, allegedly modelled on the Canada Pension Plan but more and more resembling the Quebec Pension Plan, in as much as the province plainly hopes to divert the 3.8 per cent of Ontarians’ wages it will forcibly extract into financing its transit ambitions.
But there is a more fundamental difference. The federal budget is in rough balance; the debt-to-gross-domestic-product ratio is falling; the cost of financing it, as a proportion of revenues, is at an all-time low. The Ontario Liberals’ Olympic-class complacency, on the other hand, is maintained against a fiscal backdrop that in reality is quite alarming.
Not only is the deficit, at $11.3 billion in the year just ended, nowhere near to being eliminated, but all of the numbers that are getting better in the federal plan are getting worse in Ontario. The debt-to-GDP ratio, at a record 40 per cent and second only to Quebec’s among the provinces, is still rising; interest costs, as a proportion of revenues, are likewise headed higher, even as interest rates sink to record lows.
Yet the Wynne government seems almost to go out of its way to show how untroubled it is by all this. Even the revenue windfall from “unlocking the value” of provincial assets (Wynnespeak for “sell” or “privatize”) has ostensibly been put into the infrastructure pot, though as opposition critics pointed out this is a bit of a shell game: The same money could as well be said to have gone against the deficit, with the infrastructure contribution coming out of general revenues.
About the only thing that rouses the government out of its stupor is its alleged mistreatment at the hands of the federal government. As in last year’s budget, there is an entire chapter devoted to whining about the lack of federal “partnership,” the need for federal “action,” and that old standby, the “fiscal imbalance,” three synonyms for “give us more money.”
As provincial complaints go, this is more than usually baseless. Federal transfers to Ontario, at $23 billion, are nearly double what they were just a decade ago; Ontario’s share of all federal transfers to other governments is now at 35 per cent, up from 30 per cent when the Liberals took power, and 25 per cent in 1990.
But mewling about Ottawa is so much easier than controlling your own spending. Even as a share of GDP, an exceedingly loose standard, Ontario is spending more than at any time in its history, outside of the Bob Rae misadventure. Yet not only are the Wynne Liberals unwilling to cut spending, they won’t even say it.
At one point in his post-budget news conference, the province’s finance minister, Charles Sousa, let slip that “Ontario has been able to cut its spending —” and froze, as if horrified at the sound he had just made. Quickly he recanted: “— improve its savings targets.”
He did not make the same mistake again.