Fighting Ontario's Deficit

Ah, Ontario, whatever happened to you? Once the province that prided itself on being the engine of the Canadian economy, now reduced to taking handouts through Alberta's largess. Once a major contributor to the have-not provinces of this great confederation, now a humble supplicant. And the premier of this province hardly knows where next to turn for relief. Musing about selling off the province's Crown Jewels.

Those very provincial institutions that represent the vital services the government provides in large part, for its population, many of which also add to the government's treasury. But this administration is looking for a quick grab, and not thinking quite so coherently as it should. The loss of manufacturing jobs, the global economic downturn which hit Canada far less stridently than elsewhere in the world, has impeded Ontario's advance into stability.

Would a new, alternate government have any more success? Who knows? But Doubtless Mcguilty is preparing himself for a confrontation, a la Bob Rae-style, for the province has a whopping 1.2-million public-sector employees from whom to draw life-sustaining blood - er, monetary-extraction resources.

So social service agencies, health care professionals, educators and a whole host of others employed by the province in one way or another are bracing themselves for upcoming problems. "I fully expect that an attack on the public sector and public services in our communities will be met with resistance", loftily promises CUPE's Ontario wing.

A report from the Conference Board of Canada on industrial relations warned that "uncertain economic recovery and substantial fiscal deficits" will confound collective bargaining this year. "Public-sector employers will have little money available for new spending, including wage increases ... Until more evidence is available that the economic recovery is firmly entrenched, the bargaining climate will be difficult in the coming year."

There is a forecast for economic growth in the coming year of about two percent, not a glowing expectation of firm recovery. Worse by far, unemployment is expected to hit 9.9% in 2010, staggeringly awful statistics. Director of the MBA program at Carleton's Sprott School of Business warns of the inevitability of public-sector job losses.

Moreover, given the reality that many employed in the private sector have lost jobs with little relief in sight, it seems to the general public unseemly that public-sector unions are girding themselves to battle government over annual increases. "Public sector expenditures are overwhelming composed of wages, and by definition, any assault on the deficit is necessarily an assault on wages", according to Carleton's Ian Lee.

Predictably, union leaders insist the best way to get the economy moving again is to make a spending commitment on new jobs, and to raise corporate taxes. Rationally, they claim that the economy will rebound once more people are in the workforce, paying taxes. "What are we doing cutting billions of dollars in corporate taxes? We shouldn't be doing that. We should be investing in jobs."

The reality is Corporate taxes represent 9% of provincial revenues,whereas personal income tax stands at 26% and retail sales tax, 18%. Higher sales taxes? That would be immensely popular. That, along with the incoming Harmonized Sales Tax would create a working man's revolution.

Public service wage freeze as a temporary remedial measure? The public would applaud, the unions would sizzle, but it's been done before in previous governments, NDP and Conservative. The unions' trump card? "It would be struck down; the Supreme Court ruled collective bargaining is a protected Charter right."

Then there's the back-alley measure of freezing provincial transfers to hospitals, municipalities and school boards in an overall belt-tightening process. Again? Aren't we still labouring under the previous such initiatives? Well, most union contracts aren't ready for renewal until one or two years' hence.

Before then though, there'll be more than enough flying sparks. And perhaps by then we'll see a measure of economic relief. And bring in a new government to fumble its way out of economic darkness on our behalf.