McGuinty rejects 'smarter' government in budget

So, that revolution we were promised? Those radical, transformative changes to the government of Ontario that were to follow from the famous Drummond report? That top-to-bottom rethink of how programs were delivered, designed to turn a sullen bureaucratic blob into a hive of creative thinking and competitive efficiency, and -- oh yes -- rescue the province from the fiscal abyss toward which it was hurtling?

Yeah, well: never mind.

The report that bore the economist Don Drummond's name offered the McGuinty government a way out of the enormous fiscal hole it had dug for itself over its first seven years in power. Rather than simply slash spending, Drummond mapped out a wide-ranging program of structural reforms he claimed would not only save money, but actually improve service.

They weren't all that radical. Drummond conspicuously declined to recommend any serious changes to the province's school system, or even such obvious and long-sought reforms as breaking up the government monopoly on liquor distribution. Still, the report seemed to offer a politically palatable alternative to the sharp ideological conflicts of the Harris years -- not smaller government so much as smarter government -- even if it did suggest reversing a number of Dalton McGuinty's signature initiatives.

Well now we have the government's answer, and it is: fat chance of that. Rather than accept Drummond's challenge to rethink its whole approach, Tuesday's budget opts instead for a grim war of attrition with the public-sector unions.

Indeed, the budget seems to go out of its way to thumb its nose at Drummond -- whose report, remember, the government itself had commissioned a year ago, just before the last election, allowing it to claim it had a plan to rein in spending without getting into the specifics of what that might entail. So, where Drummond recommended rolling back the hugely expensive ($1.5-billion a year) promise to turn kindergarten into an all-day affair, the budget pledges the government to "fully implementing full-day kindergarten by September 2014."

Where Drummond doubted the wisdom of pouring scarce dollars into reducing class sizes -- a nice-sounding reform that evidence shows is of very little benefit -- the budget commits the government to "keeping a cap on class sizes in the early grades." The 30 per cent rebate on university tuition fees, a regressive sop to the Liberals' upper-middle-class supporters that Drummond had urged be pitched, is likewise something to which the government "remains committed," as for the most part is the equally ill-conceived but no less politically popular 10 per cent subsidy on electricity bills.

Even the $3.5-billion the province hands out in subsidies and tax breaks to business every year -- the lowest of low-hanging fruit, one would think, for a government on track toward a $30-billion deficit five years out -- was apparently off limits. Where Drummond recommended tossing the lot, the budget pledges only to "consolidate" them into a single fund, trimming just $250 million from the total. At the same time, it proposes to freeze the corporate tax rate at 11.5 per cent, rather than cut it to 10 per cent as previously planned. Businesses generally will pay more tax so McGuinty can subsidize favourites.

And yet, the budget shows spending on more or less the restraint track Drummond proposed. On its face, this is fairly impressive, especially for a minority government. If the budget is any guide, in five years spending would be just 6.4 per cent higher than it was, not this year, but two years ago. That's some serious restraint, if only relative to the orgy that preceded it. In the McGuinty government's first seven years in power, spending grew by more than that every year.

How does it propose to get there? Largely by imposing a freeze on wage increases on its largest unions. Ostensibly this would be negotiated "in good faith," but there's little doubt what is meant by the "necessary administrative and legislative measures" the government warns it would resort to in the alternative. Here again, the budget appears to be rejecting Drummond's advice. While some restraint in wages was unavoidable, he suggested, given that labour costs make up half the budget, an across-the-board freeze risked simply storing up trouble for later: experience showed wages tended to accelerate again after the freeze was off. Is that what the province is in for? Five years of trench warfare with its own employees?

Fully a third of the $17.7-billion in spending cuts pencilled in over the next three years comes from the "compensation restraint" envelope. Another $5 billion is to come from a grab-bag of relatively minor "expense management measures," such as using digital imaging in place of paper or self-insuring against liability claims, detailed in an accompanying pamphlet.

The remaining $6.8-billion is labelled, mysteriously, "cost avoidance." Nowhere in the budget is this figure itemized, nor could Finance officials describe exactly what it involved. It seems to be more or less the residual between the savings the government hopes to achieve and the ones it has figured out to date.

That's been the government's modus operandi until now. The McGuinty Liberals sailed through the last election assuring everyone they had a plan, or at least that Drummond would tell them what it was. In the event, Drummond's report seems to have served mostly as a source of examples of what the government would not do. And what will it do? How does it propose to balance the budget by 2018? I'm guessing we'll have to wait until after the next election.

Andrew Coyne is a national

columnist for Postmedia News.

Republished from the Winnipeg Free Press print edition March 29, 2012 A11