Labour confrontation threatens Ontario’s transformation

Dalton McGuinty’s attempted wage freeze is boiling over.

Public sector unions are seething. Opposition parties are frothing.

But the premier’s latest tensions with organized labour are only a foretaste of tougher times ahead for Ontario.

As McGuinty fights a rearguard battle against his former labour allies, he is quietly launching a frontal assault on his own $125-billion-a-year provincial government: Not just wage restraint, but reformation.

NDP wealth tax a ‘bad move,’ Don Drummond says

The NDP wealth tax in the provincial budget was a “bad move” and will struggle to reap even half the $470 million a year the minority Liberal government expects, says economist Don Drummond.

Ontario will be fortunate to collect between “$200 million and $300 million, tops,” the former TD Bank executive and author of a report on Ontario’s financial situation said Friday in his first public comments on Premier Dalton McGuinty’s fiscal blueprint.

Ontario Liberals haven't yet passed the real Drummond test

Even before Dwight Duncan had delivered his fiscal plan on Tuesday, he and his critics were firing volleys back and forth about just how many of Don Drummond’s recommendations it includes.

To listen to the Finance Minister, the fact that he’s adopted more than half the economist’s 362 cost-cutting suggestions and ruled out just nine shows his seriousness about eliminating Ontario’s $15.3-billion deficit. To listen to the opposition Progressive Conservatives, the fact that the governing Liberals kiboshed some of Mr. Drummond’s most controversial proposals – such as scrapping full-day kindergarten and increasing class sizes – shows the contrary.

Of all the debates around Ontario’s budget, it’s one that spectacularly misses the point.

While Mr. Drummond’s report was a useful catalogue of cost-cutting options, the real value wasn’t in the individual recommendations, most of which were already familiar to people in and around government, and many of which overlapped.

Ontario budget: Dwight Duncan to adopt half of Drummond’s 362 cost-cutting recommendations

The Ontario government will adopt half of economist Don Drummond’s 362 cost-cutting recommendations in Tuesday’s austerity budget, the Star has learned.

Only a few of Drummond’s suggested cutbacks — mostly related to education — are being disregarded outright, Finance Minister Dwight Duncan said Wednesday.

“We have rejected 16 of Drummond’s recommendations. You will find in the budget that we’re moving on a little more than half of them. And on the balance, they require more study,” he said in an interview.

That means almost 96 per cent of Drummond’s landmark Feb. 15 report on reforming public services will be enacted or remains under active consideration.

Duncan stressed the government would not be proceeding with the former TD bank economist’s recommendation to eliminate 70 per cent of the 13,800 non-teaching positions — 9,660 jobs — created in Ontario since 2002-03.

Drummond report recommendations will be devastating to low income Ontarians

She lost her job as a bookkeeper in 2009. A victim of workplace bullying.

Since then, she’s been looking for another job. But several of her front teeth are missing and she can’t afford to get them fixed.

Yet somehow she barely manages to survive on welfare.

“I’m kind of between a rock and a hard place,” she says.

Michelle Hruschka can’t go back to school because she can’t shoulder the debt burden. Without a bursary for school or a decent job, she feels as if she’s run out of opportunities.

She refuses to work for temporary help agencies. She’s done that before and was a victim of wage theft.

“Even if you go through the process with the Ministry of Labour, the legislation still isn’t strong enough to ensure that you’re paid,” she says.

Assets in the dirt

The people of Ontario have taken two weeks of being kicked in the assets following the release of bank economist Don Drummond’s report on government overspending.

The document is one-third wake-up call (we’re spending a lot of money very inefficiently), one-third call to arms for some bold eco-economic thinking and one-third shock therapy designed to scramble the brain with despair caused by an absolute lack of alternatives.

Welcome to Ontario’s version of the revolution of falling expectations. If you buy his assumption that there is no more money coming from growth based on new industries or sales opportunities, you have no choice but to buy the math. Rejoice –  you have no choice. That’s why the opening chapter features “strong fiscal action” rather than strong political leadership.

The pillars of Ontario’s industrial economy of the past century have crumbled, Drummond tells us. The World Trade Organization killed managed trade deals like the Auto Pact. The rest of the manufacturing sector went south looking for cheap labour. And the rising Canadian dollar killed off the remainder – once-competitive export sales that thrived when the dollar was cheaper.

Drummond's Dodge on Healthcare

Amid the hubbub following the release of the Drummond Report, I can't help but think of one of the biggest financial scams of the past century: Bernie Madoff's Ponzi scheme, which wiped out hundreds of formerly well-heeled investors. The lesson from Bernie? If something is too good to be true then it probably is.

Which is exactly what Don Drummond is telling us. For years we've been paying taxes to prop up a mismanaged healthcare system in the expectation that it will be there when we need it. Now, Drummond is telling us the Ponzi scheme is coming to an end. To keep the system going requires major changes: Drummond supplies 362 recommendations spanning 532 pages, 105 recommendations on the healthcare system alone.

Reading them over, it's clear Don has done his homework. Rarely has a government-commissioned report featured prose so concise, or so readable. Rarely has a report provided such an honest assessment. "We cannot count on the magic bullets of faster economic growth or rapid productivity gains to finance our health care needs and wants," he notes. And: "The public debate in Canada has been poisoned in recent decades by a widespread failure to comprehend the issues ... by politicians (and media outlets) who have been too willing to pander to fear-mongering."

Drummond-style restraint would be Ontario’s Greek tragedy

For Ontario, the real lesson from Greece is not the danger of debt. It is the danger of overreacting to that debt.

This is not how the debate is usually framed. The standard argument, articulated most recently by Liberal government adviser Don Drummond (and repeated Tuesday by Premier Dalton McGuinty), is that debt and deficit will career out of control unless public spending is dramatically curbed.

Ontario’s debt may seem manageable now, Drummond’s four-person commission wrote in a report released last week. But so did the debt of hard-hit Spain just four years ago.

“Even Greece, the poster child for rampant debt, carried an Ontario-style debt load as recently as 1984,” the report warned.

In this, Drummond is correct. As a percentage of gross domestic product, Spain’s debt did double between 2007 and 2011. But that doubling happened not because Spanish government spending was out of control.

The world that made Don Drummond

In his opening paragraphs to the 18th Brumaire of Louis Bonaparte, Karl Marx noted that people "make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past."

It is one of the most basic and fundamental insights into the way our society, its politics and its mass thinking work, and yet its meaning is often forgotten or ignored.

We, as people exist in a context, and that context shapes the way we think and the way we act. That context is sometimes of our own making, in part or in whole, but regardless, it is inescapable and it frames the way we think, react and act as a society, often imperceptibly.

This social discourse evolves constantly, and the actions of politicians and political advocates help to shape what becomes the essential framework of their day.

The citizens of Ontario have come under a kind of full-frontal ideological assault recently, delivered to them by an agent of their own provincial Liberal government, the former TD Bank economist Don Drummond. His commissioned report has recommended deep cuts to programmes that millions depend on. It disgracefully calls for the imposition of user fees on things like school buses (as one small example), massive cuts to health care, farcical ideas such as ending all-day kindergarten or cutting access for seniors to medication. It seeks to undo the little that the Liberals can claim as their attempts to reconstruct an inclusive civil society in the wake of the Harris years.

What's wrong with Ontario – and how to make it right

It got most of its attention for its warning of a $30-billion deficit, and its 362 cost-cutting recommendations to help avoid that fate.

But the scariest number in Don Drummond’s landmark report to the government of Ontario is a much smaller one: two, as in 2 per cent.

That’s the level of annual economic growth that Mr. Drummond, a former economist at Toronto-Dominion Bank, thinks the country’s largest province will have in the years to come. And while long-term projections are notoriously unreliable, that pessimism is grounded in the reality of a manufacturing-reliant province that coasted by on built-in advantages – a low dollar, low energy prices, a reliable U.S. market in close proximity – that have now evaporated.

For all that there is to fear in Mr. Drummond’s projection, and for all the consternation that his doom-and-gloom projection is causing, there is also cause for hope. Something is happening in the boardrooms of the private sector and the backrooms of government: The grim outlook is kicking off an overdue debate about how to reinvent a province that is still the economic heart of Canada.

Drummond report, Alberta budget expose Canada’s two-tier economy

Set the draconian regime for Ontario prescribed by economist Don Drummond this week against the rosy 2012 budget Alberta has just brought down and what you have is the stark picture of a two-tier national economy.

Even if one discounts the fact that the Alberta roadmap is designed to see the ruling Tories through an imminent provincial election, the circumstances behind the production of each document make the two provinces about as different as Germany and Italy.

On the one side, there is talk of irreparable fiscal damage if every inch of fat and an additional amount of the actual flesh of Ontario’s public services is not put under the knife.

On the other, in Alberta, there is the commitment to a steady flow of new money for health and education and the promise that its status as Canada’s lowest tax jurisdiction will be maintained.

The real victims of the Drummond report’s cuts

Don Drummond, Ontario’s adviser on everything, says the harsh government spending cuts he wants must be seen as fair to succeed — they must hit everyone.

In fact, they almost certainly won’t. The well-off will fare better than the poor and middle class. Public sector employees will be hit harder than those in the private sector.

Groups with political clout — such as the multinational pharmaceutical firms that charge prices Drummond deems too high — are sure to successfully resist proposals that they share the pain. They’ve done so before.

Most alarmingly, Drummond’s harsh medicine would throw tens of thousands more Ontarians out of work.

His proposed spending cuts may result in a balanced budget by 2018. But calculations based on Drummond’s own figures indicate they will push the provincial unemployment rate into double-digit territory.

Drummond Report: School boards fear loss of independence

School boards can’t raise taxes to boost their budgets. Collective bargaining with teachers and support staff has largely been taken out of boards’ hands.

Now, the economist advising Ontario on where to find cuts to help deal with the deficit has said the province should be able to order boards to sell unused buildings — such as closed schools — and also gut 70 per cent of non-teaching staff such as psychologists, education assistants and guidance counsellors.

School boards say Don Drummond’s recommendations, if implemented, would not only affect the quality of education but also further erode their independence.

“If they wanted to do that, why don’t they just do away with us?” said Toronto District School Board Trustee Sheila Ward, of the proposal to give the province the power to force boards to sell buildings.

No minister of the government has that expertise, she added — even she and her fellow Toronto trustees realized they didn’t have such expertise and that’s why the board created the arms-length TLC (Toronto Lands Corp.) to manage its real estate, she added.

“I don’t think any minister sitting at Queen’s Park can begin to have the knowledge that we have here of our facilities, our schools,” Ward added.

What the Drummond Report Didn't Tell Us

The much-anticipated Drummond Report has been released, with the biggest conclusion being that unless public spending is radically curbed, Ontario's deficit will balloon to $30.2 billion by 2017-18. Dalton McGuinty's Liberal government maintains that it will balance the books by that same fiscal year.

The report's recommendations will require the Grits to make some very difficult choices. At a critical time in the province's history, the expenditure-related challenge lies in finding the appropriate balance between reducing spending on unsustainable programs and investing appropriately in long-term initiatives.

Yet an additional challenge lies in finding creative ways to increase revenue for the government. Don Drummond was told for his report to exclude tax increases as an option for fixing the province's finances.

Some of the report's suggestions appear frankly unachievable -- such as capping annual health care spending increases at 2.5 per cent, down from the 6.3 per cent average over the past five years -- simply due to the sheer demographic shift that is to take place over the years and decades ahead. While the feds can easily cut transfers to the provinces, the latter has the responsibility to deliver many of these services.

Recession, deficits and austerity in Ontario

Ontario public service advocates and providers are becoming increasingly and rightfully alarmed about the direction of provincial finances, in the run-up to the public release of the Drummond Commission report, and a subsequent provincial budget that looks to be painfully austere.

The budget-cutting set are ramping up the rhetoric pretty dramatically: warning that Ontario is fast becoming the "Greece of Canada," that we are about to hit the "debt wall," that interest rates will skyrocket when the debt raters wake up, and similar nonsense. This is pure shock-doctrine stuff (reminiscent of like propaganda that set the stage for Paul Martin's austerity in the mid-1990s), and must be called out for what it is.

Ontario is not remotely Greece. A good way to make us MORE like Greece would be to throw tens of thousands of broader public sector workers out of their jobs, in a misguided effort to dig our way out of a hole. Investors love our bonds (and those of every other Canadian province) -- that's why they finance 10-year loans for interest rates barely above the rate of inflation. The key task in strengthening the fiscal balance is to put people back to work: paying taxes (instead of collecting EI), and buying stuff (instead of hoarding cash). While the provincial government's toolkit in that regard is not infinite (the feds have far more ability to influence job-creation, through macro, monetary, exchange rate, and other policies), we can't consider the provincial fiscal challenge without placing it in its appropriate macroeconomic context.

Drummond Report: New roadmap for Ontario includes higher hydro bills, larger school classes

Gloom — or doom.

That’s the outlook for Ontario, according to a sweeping review of public services urging higher hydro bills, larger school classes, a streamlined health-care system that could lead to fewer hospitals, more expensive tuition and increased user fees.

Don Drummond, chair of the commission on public-service reform, on Wednesday delivered the roadmap for Ontario’s daunting journey.

It came in the form of a two-volume, 668-page report so weighty that a table collapsed when Ontario Provincial Police officers unloaded embargoed copies in the media lock-up.

“Ontario faces more severe economic and fiscal challenges than Ontarians realize,” said Drummond, a former TD Bank chief economist, warning the deficit would balloon from $16 billion this year to $30.2 billion by 2017-18 unless the hemorrhaging is stanched.

“Our message will strike many as profoundly gloomy. It is one that Ontarians have not heard, certainly not in the recent election campaign, but one this commission believes it must deliver,” he said, castigating all the major political parties for saying they could balance the books within five years relatively painlessly.

Drummond report: ‘Controversial’ prescription in store for health care

Don Drummond’s “very controversial” prescription for what ails the province will include some radical surgery to Ontario’s $47 billion health-care system.

Sources told the Star the former TD Bank chief economist’s 700-page report on reforming public services devotes 100 of its 362 recommendations to health, which accounts for 42 per cent of program spending.

The findings will be unveiled Wednesday at a Queen’s Park lock-up for the media and opposition parties before being made public at 2:15 p.m.

While some recommendations would be politically difficult to implement — like removing coverage of certain procedures from OHIP — Health Minister Deb Matthews warned Tuesday “this is a time of significant change in health care.”

“We know there are places in the health-care system where we are spending money that does not need to be spent,” said Matthews, who is pushing reforms in an “action plan” she unveiled two weeks ago.

Drummond report: Sweeping education reforms recommended

Don Drummond wants Premier Dalton McGuinty to raise the primary school limit from 20 students per class, scrap or revamp full-day kindergarten and roll back the new 30 per cent cut in college and university tuition.

The head of Ontario’s commission on public service reform makes 362 recommendations in a 700-page report to be released Wednesday, including the eradication of McGuinty’s signature education promises from the last three elections.

Drummond implores the government to spend more money in only one area — aboriginal education because too many First Nations children live on reserves without proper schools.

The former TD Bank chief economist, hired to chart a map to pay down the $16 billion deficit by 2017-18, is urging annual government spending increases to be capped at just 0.8 per cent.

That means overall government spending would be raised by just $6.3 billion over the next five years.

Put in perspective, spending has skyrocketed by $40.5 billion over the past five years — from $83.5 billion in 2005-06 to $124 billion last year.

Drummond Commission: Taking Ontario out of commission

If you are looking for evidence of class collusion you've come to the right place. Last spring, Premier Dalton McGuinty put a banker in charge of examining Ontario's public services and asked him to recommend ways to decrease government spending. While the official report has yet to be released, drafts reveal that it proposes deep funding cuts to social programs, an overhaul of health care and education, and the sale of public services.

Don Drummond, a former executive and chief economist at TD Bank (a major investor in Public-Private Partnership schemes in Ontario) is heading what has become known as the Drummond Commission. The recently retired financier has been instructed to only consider strategies for cutting costs, not methods of raising revenue. Drummond must have been delighted by the challenge, as he has already authored a number of reports calling for the privatization of social services, and currently opines such views on the boards of various pro-privatization organizations.

Meanwhile, the Ontario government has failed to open up the process to public input, failed to establish legislative committees on the topic, and failed to ensure the inclusion of pre-budget hearings.

Kill full-day kindergarten, Drummond report says

In a highly anticipated report due next week, economist Don Drummond will suggest Ontario scrap its full-day kindergarten program to save hundreds of millions of dollars, according to a media report Friday.

Citing a senior government source, the Toronto Sun reported that Drummond proposes axing the program for four-and five-year-olds across the province.

The Liberal government has spent $200 million since it began phasing in the fulltime program in the 2010-11 school year. This year, it plans to spend another $300 million on the program, which is now in 800 schools.

Drummond, a former economist with TD bank, was tasked in the past few months to review Ontario's finances and to help the province bring under control its $16-billion deficit.

His lengthy report, which will be released Wednesday, is expected to put forward dozens of cost-cutting measures.

News of the recommendation drew criticism Friday.