Thursday, 16 February 2012

Public Sector Insolvency and Interprovincial Rivalry

We're really seeing eye to eye: The gap between us is like the space between these cliffs - not very big.

For weeks we've heard the drums being pounded by stern news articles headlined by bad expressions: "Ontario is in big trouble." "Ontario is in the fiscal soup" "Ontario needs to take its medicine" "Ontario about to get its wake up call". The headline writers hoped that their rhetorical flourish was going to shake the population and its freshly re-elected premier out of the apathetic sleepwalk that got us here. That hope was as misguided as me sitting here hoping to be raptured into heaven and leave my pile of clothes on the floor.

No, it was all an exercise in flogging a dead horse with a dead horse. If you read the news, you saw this coming ages ago. This is why the release of the Drummond report yesterday was not a bombshell.

It was not a death knell.

It was not ground breaking.

It was a former public servant and bank CEO telling 14 million people, most of whom were not listening, that the provincial financial ship has run aground. In other words, what many of us who live here have known and have been writing about for years.

I don’t know what he got paid, but it doesn’t really matter, because our population that does pay attention is not stupid. No disrespect to Drummond, but everyone with their eyes open has seen the financial realities he smacked his brick of paper on the table to wake his compatriots up to in the offing for years. After all, we live in a weak-kneed, head-in-the-sand kind of society, headed by the weakest-kneed, head-deepest-in-the-sand kind of politician par excellence, Premier Dalton McGuinty.

Here are some recommendations for free, not the six figure fee Drummond no doubt charged for his services, that you don’t need to sift through seven hundred pages to dig up. I have no fiscal calculations but I bet they would put a solid dent in that 16$ billion deficit Ontario is grappling with, if not outright eliminate it

-3 bucks to take the 404 South of Steeles Avenue, starting as soon as we can get a toll bridge built.

-2 bucks to take the Gardiner Expressway into Toronto East of the 427.

-Mandatory $150,000 pay cap for all senior public servants. No more million dollar hospital CEOs and University presidents, and no more 300k a year useless premier!

-10 bucks user fee per doctor visit. Why not? I went to the doctor today. I could have paid ten bucks. And I don’t even make a lot of money! Why was it free? People on welfare spend upwards of $300 a month on Rogers bundles for Christ’s sake!

-Immediate consolidation of public and catholic English language school boards. I’m tired of the whining about history and the constitution and the box you check to direct your tax dollars to which board. You want publicly funded religious schools? Vote with your feet and move to another jurisdiction that has them. Oh wait, there are none.

-Raise the corporate tax rate by 2%

-Raise the provincial income tax rate by 2%

-Raise resource (mines, minerals, forests) royalties

-Levy congestion charges based on home and work place postal code distances

-Sell off the part of the LCBO that will allow beer and wine to be sold in convenience stores, which would not turf the lickbo employees out but would allow a nice boost to private enterprise and more choice for consumers so we could have similar systems to Quebec and BC.

-Start taxing lottery winnings

-Immediately wind up and grandfather existing police, teacher, firefighter, and public servant Defined Benefit Pension plans and replace them, going forward, with Defined Contribution Pension plans

As long as the gang of “steady as she goes, status quo into oblivion” Liberals are at the helm in Ontario, you can count on exactly zero of my ideas being implemented. Why would they? They step on too many special interest groups’ (public unions, sunshine listers, commuters) toes whose votes the Liberals covet with their fake rose-coloured glasses collectivist thinking. So I don’t know why they manufactured all this buildup and suspense around Mr. Drummond’s report. They are fundamentally incapable of making hard choices or (god forbid) offending anybody. This government will make the stupidest and rashest of decisions (e.g., cancelling a natural gas plant in Mississauga to save one seat) even when it totally exposes them for the spineless, shameless panderers they are. So I don’t place too much stock in them doing anything it says to do in this non-binding report. As many observers have already pointed out, the Liberals already stated they are ignoring one of its major recommendations, the axing of full day kindergarten.

That’s the bad news.

The good news is, no matter what happens, life will go on in Ontario. Much as it has gone on in Italy, Spain, and yes, even Greece. Several comments were calling us the Greece of the north in the report aftermath. These are people who think a tear-gassed, rioting street corner in Athens is an entire country. Fourteen thousand islands. Do you think people are starving or something? (Ok, food bank use is probably up but I would still travel to Greece tomorrow if I had a chance. Somalia or Afghanistan? Not so much)

The developed world will continue to enjoy standards of living far beyond anything remotely imaginable fifty years ago, even if bond traders in New York and London push up its governments’ borrowing costs. And I’m not saying that’s an outcome I want – but again, look at the reality-avoidance paradigm we live in. My recommendations (which would cause very, very little pain) are ignored because they close off certain people’s sweet deal loopholes which benefit nobody else.

As for the plethora of commenters and pundits exhorting Ontario’s lost and deprived youth to “pack up the truck and head west before its too late” because there’s “no future here”, I wonder how it can be legal to print such drivel. Alberta has the highest public sector wages and the highest per-capita public sector costs and spending in the whole country. So all these red-meat conservatives in Western Canada who love to trash McGuinty maybe should take a look at the “conservative” premier of Alberta who just put out a deficit budget that would make her most profligate of colleagues Mr. McGuinty blush. A deficit budget – at a time when a province is reaping more bucks from its oil than ever – what does that tell you?

If Alberta had implemented a fund like Norway for a portion of its oil and gas profits, it would have $100 billion in cash right now that it could be making another $5 billion a year off of. Jeffrey Simpson at the Globe pointed this out last week. Former premier Peter Lougheed, a real conservative, had established such a fund (the heritage fund), but because it was repeatedly raided by subsequent fiscally irresponsible fake conservative premiers, there is not even $15 billion in there today.

Of course, nobody cares because in Alberta everyone’s hiring, every one’s making lots of money, and everyone’s having lots of babies. So that’s the new Canada, where things are really happening. However, if people in our country ever researched anything they would know that several US jurisdictions and foreign countries have also experienced similar gangbusters growth fuelled by petroleum in the past, and are either forgotten, declining, hurting, and across the board definitely not “centres of gravity” today. It’s pretty simple to grow when you’re cashing oil cheques – the stuff is valuable and sells better than anything, even hotcakes. But what happens when the oil is gone and all you did was party?

Everywhere in Canada there are lots of opportunities to work, start businesses, get educated, do and see fun things, and raise families. This is a great place to live. But what do I know? Listen to the media pundits who tell you anywhere east of Saskatoon is now third world. Listen to conservative trolls on forums who talk as if Alberta was really skilled and disciplined and not just a place who drills and pumps loonies out of the ground. Head west and freeze your ass off all winter working on derricks, or in bitumen strip mines, or on seismic lines, or in gas plants and vinyl plants and petrochemical plants and fertilizer mines, living in portables and overpriced, treeless, car-dependent subdivisions. Or you could get a job driving tankers or goods across flat land from one butt-fudge eyesore town with a Husky and a 7-11 to another. It’s really disillusioning to drive for hundreds of kilometres a day and not be able to procure yourself any food except milk duds and beef jerky and chew. But go west! Cause here in McGuinty-land, we’re just a food stamp regime one step away from skid row now.

No wonder I had to resolve in 2012 to swear off media.

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