Day: February 15, 2012

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Don Drummond, former chief economist at TD Bank, is chair of the Commission on the Reform of Ontario’s Public Services.

Ontario faces two huge challenges – economic and fiscal.

The province has already slid below the average of the rest of Canada in terms of output and income per capita. Beyond the next few years of recovery, Ontario can look forward to only modest annual growth of around 2 per cent, well below historical norms.

This reality frames the fiscal problem. The province can’t simply adjust its fiscal parameters for a few years to eliminate a deficit caused by the recession and associated stimulus. Even with the restraint measures already taken, the provincial deficit would continue to rise in an environment of modest economic growth. The fiscal response must not only be strong and sustained, it must reform the way the government delivers virtually every service.

Last March’s provincial budget established the Commission on the Reform of Ontario’s Public Services to advise the government on how to return to a balanced budget no later than 2017-18 and how to get more value for taxpayers’ money.

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The National Post is Canada’s second largest national paper.

We couldn’t read the Premier’s lips because he was conspicuous by his absence. But Dalton McGuinty has been explicit in recent speeches — the $16-billion deficit that is on course to balloon to $30-billion within seven years, will not be balanced by raising taxes.

That means the Premier will have to implement all 320 recommendations made by economist Don Drummond and his Commission on the Reform of Ontario’s Public Services, released Wednesday. Except, the Ontario Liberals have already made clear they will ignore Mr. Drummond’s suggestion on Mr. McGuinty’s pet full-day kindergarten project — namely that it is a $1.5-billion luxury the province cannot afford.

The former TD Bank chief economist pulled no punches in his press conference: “This is pretty much unprecedented in post-war Canadian history. It is very daunting. Lots of governments have had it tough for two to three years. But then there was a reprieve. There is no reprieve here,” he said, pointing to low growth rates as far as the eye can see.

The report said the slow decline of Ontario’s manufacturing sector is partly to blame for the malaise that will see the deficit double and net debt rise to 50% of GDP by 2017/18. But it did not gloss over the culpability of a Liberal government that has failed to keep spending in line with revenue growth.

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