3. Introduction
• Ontario is at a crucial inflection point. According to Don
Drummond, the province is on a path toward a $30 billion
deficit and $411 billion debt.
• Urgent action is needed on two parallel tracks, one that
takes immediate action to reduce the size and cost of
government and another that kickstarts economic growth
to put people back to work.
• The current government has no plan to reduce the deficit
or prolonged unemployment. In fact, its decisions
continue to compound the problem.
• Ontario needs a detailed plan that will show how the
government will solve the debt problems it has created.
Budget 2012 failed to do this, and as a result, Ontario’s
credit rating was downgraded. 3
6. The lack of a plan did not go unnoticed
• RBC Economics, March 27, 2012
– “The details for the remaining two-thirds of the
journey toward a balanced budget are not much
clearer today than they were before the budget...”
• Standard & Poor’s Ratings Services, April 25, 2012
– “We believe the province’s main credit challenges
include its continuing weak budgetary and debt
metrics and its challenging cost-containment plan.”
• Moody’s Investors Service, April 26, 2012
– “The downgrade of Ontario’s rating reflects the
growing debt burden…extended timeframe back to
balance and ambitious expenditure targets.”
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7. What can we do about this lack of disclosure?
• There is no way to tell how the Liberals intend to balance
the budget with the current disclosure.
• However, we can get some sense of what they are
planning by plugging in some basic assumptions.
• The next series of slides extends the Liberal plan out with
a few basic assumptions around growth rates.
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9. Health
• Recent average increase
is 6.6%.
• Lowest achievement was
2.2%.
• Drummond recommended
“very restrained growth in
health care” at 2.5%.
• Let’s assume 2% for now
– even more restraint than
recommended by
Drummond.
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10. Education
• Recent average increase
is 5.6%.
• Lowest achievement was
2.3%.
• Drummond recommended
1%.
• Let’s assume 1% for now.
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11. Post-Secondary Education & Training
• Recent average increase
is 8.3%.
• Lowest achievement was
1.2%.
• Drummond recommended
1.5% for post-secondary
(excluding training).
• Let’s assume 1%.
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12. Children’s and Social Services
• Recent average increase
is 5.4%.
• Lowest was 1.2%.
• “Expense in the children’s
and social services sector
is projected to grow by an
average annual rate of 2.7
per cent per year over the
medium term.” (Budget
2012)
• Drummond recommended
0.5% (but not acted on)
• Let’s assume 1%.
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13. Justice
• Recent average increase
has been 4.5%.
• Current fiscal plan
assumes this portfolio will
remain frozen at $4 billion.
• With inflation, that is a
plan to shrink Justice.
• Let’s assume 0%.
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14. Other programs
• In the current Liberal plan to balance, all other Ministries
are grouped into “Other Programs.”
• Once the expenditure plans are set for the larger
groupings discussed earlier, the remaining Ministries
must make do on what is left.
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15. Other programs list
• Aboriginal affairs • Francophone Affairs
• Agriculture Food & Rural • Government Services
Affairs • Infrastructure
• Citizenship and • Labour
Immigration • Municipal Affairs & Housing
• Consumer Services • Natural Resources
• Economic Development & • Northern Development &
Innovation mines
• Energy • Tourism, Culture and Sport
• Environment • Transportation
• Finance
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22. Conclusions
• Even if we assume the Liberals have an aggressive cost
containment plan for:
– Health
– Education
– Training, Colleges & Universities
– Social Services
– Justice
• The Liberals still have to cut the rest of government by
25%.
• Because big chunks of the rest of government are not
likely to be reduced, this means that many Ministries must
be reduced by 50%, or some Ministries eliminated entirely.
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23. Conclusions
• The Liberals do not have a “plan” to balance the budget.
• They have not informed stakeholders that their “plan”
requires massive reductions.
– Are we facing years of restraint in health, education
and other programs?
• Their plan puts off major cost containment until 2016.
• No specific actions have been identified by the
government to achieve their planned reductions.
• The government has not been honest with Ontarians
about our situation.
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