Tuesday, April 3, 2012

Tale of Two Budgets

Last week both the provincial government of Ontario and the federal government of Canada revealed their budgets for fiscal year 2012. I am, perhaps unsurprisingly, quite displeased with the actions of my governments and their proposed plans. Strangely, my criticisms of these two governments are from opposite sides of the spectrum.

Beginning with Ontario, the provincial budget begins the task of wrestling the deficit and debt under control. Earlier this year Don Drummond released a report discussing his recommendations to fix the Ontario government. Despite appointing Mr. Drummond Mr. McGuinty has deemed it fit to ignore his recommendations for the most part. Love it or hate it the Drummond Report called on substantial reform and asked Ontarians and their leaders to rethink how the government carries out social services.

Take a look at this info-graphic. Here we see a visual break down of Ontario’s spending and revenues. Mr. McGuinty’s government has ignored the far-reaching reforms Mr. Drummond called for, and instead is doing in part the opposite of what he advised. The Ontario Liberals hope to cut spending by freezing civil servant salary and negotiating very toughly in a few years time when their contracts are due to be negotiated again. The province is targeting teacher’s benefits, such as the current system that their sick days work under.

The Drummond report proposed notions that would be unpopular, but have a structural impact on the deficit and debt, such as ending all-day kindergarten and increasing class sizes. As Adam Radwandski points outin the Globe and Mail the issue is not how many of Drummond’s initiatives the Liberals took up, it’s the short-term, limited thinking the government is using to balance the budget. A more holistic rethink of what the government is doing/spending would have been a far better measure than dooming Ontario to years of unnecessary labour strife.

There are positive changes in the Ontario budget, I’m not too partisan to see that. I found the pressure the Ministry of Education will be putting on school boards to shut down mostly empty schools to be well overdue. Capping spending growth is usually ineffective, but if it produces reforms that will be to the positive. Look again at that info-graphic. We must evaluate how we approach healthcare in Ontario. We are on an unsustainable path. I believe in the public system, but I fear if we do not make changes now we will lose the system forever in a catastrophic debt crisis years down the road.

Given that it is a minority government (barely) the NDP are being courted to help pass the budget. Today Ms. Horwath, leader of the Ontario NDP, released some conditions. She is asking for a 2% income tax increase on those making over $500,000 per year. These funds would be used to remove the HST from home heating and provide funding for childcare and assistance for those with disabilities. It is a modest change. Tim Hudak and the Progressive Conservatives have stated they will vote down the budget regardless.

The federal budget concerns me for entirely different reasons. Here is a similar info-graphic explaining the federal budget. The cuts are worrying. Though the expenditures of the federal government has bloated in recent years I feel these cuts do not target where spending has increased. If the Conservatives were interested in balancing the budget I would have liked to see them start with all their pet tax credits, like the children’s fitness tax credit. Creating social policy through the tax code is, in my opinion, foolish. I am not expert in the federal budget, but reports seem to indicate that the Conservatives are not getting rid of programs that serve no purpose or wasteful subsidies. The Tories appear to be targeting the essentials of the Canadian federal government. The controversy over Atlantic search-and-rescue infrastructure is a symptom of this. The last thing I want is for the federal government to preside over equalization programmes, Old-Age Security and the military/foreign policy like our neighbours to the south.

The federal government has a role in regulating industries, and serving the public interest. The cuts to Elections Canada and MPs office budgets seem like petty slashes at the overall effectiveness of our system. The increase in OAS seems unnecessary, and many claim the program is solvent, unlike its American equivalent.

What really troubles me is the reduction in environmental regulations. The Harper Government appears to be banking on Canada’s natural resources to drive the economy through mining and fossil fuels. In short, Stephen Harper’s vision for Canada is for us to be the drawers of oil and the hewers of minerals. It is an incredibly limited perspective. My opinion is that the resource-oriented nature of the economy is already hurting the Canadian economy broadly and the Ontario economy in specific. How are towns like St. Catharines supposed to benefit from a resource boom hundreds of kilometers away? What about those who live down stream who have seen a spike in cancer in recent years? There are costs to this type of policy. The budget is passive enough that most Canadians will find it reasonable and move on, if they pay attention at all.

The federal budget will pass with virtually no amendments. The Ontario budget may see some changes to appease New Democrats into voting for it. Overall a sad state of affairs from my point of view. I must credit the federal Conservatives for taking a long-term view, I just happen to disagree with it.

In other news an election has been called in Alberta. I may mention it as time passes, but I offer no guarantees at this point.

Oh, and it’s about time we got rid of the penny.

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