A Tale of Two Budgets

To prepare a briefing for my public management students about the federal and Ontario budgets, I diligently scrolled through both. Two similarities became apparent.

First, both led off with good news. The federal government used the rubric of Jobs, Growth, and Long Term Prosperity, and is continuing to use the Economic Action Plan brand, over three years after it was introduced as the response to the 2008-09 financial crash and recession. Indeed, most of the document was about the government’s new spending initiatives and only in the last third are budget cuts discussed. Its spending initiatives over the next two years will total approximately $ 2 billion. We can consider them as being funded by the $ 5 billion in cuts to be achieved over the next three fiscal years. This is in keeping with my co-author Allan Blakeney’s approach of “putting government through the wringer” at the start of a new mandate so that the savings can be redeployed to new priorities.

The Ontario Budget, more ambiguously titled, “Strong Action for Ontario,” is dealing with a more challenging fiscal situation. Nonetheless, the budget led off with an affirmation that the government would not reverse its signature initiatives, such as full-day kindergarten, a reduction in class sizes in elementary school, and the 30 % tuition reduction for college and university students.

In discussing restraint, the federal government is being vague to the point of being disingenuous. Little detail is provided about many department’s cuts, and in many instances the government is claiming that they can be achieved through back-office economies, such as consolidation of support systems and improvements in IT. The implication of this claim is that standards of service to the public will not deteriorate.

The Ontario government is also somewhat vague in places, for example about how modernizing the Ontario Lotteries and Gaming Corporation and optimizing the revenue potential of the LCBO will lead to its expected revenue increases, or about how it will ratchet down the annual rate of increase in its health budget to a mere 2.1 %.

In the federal government, concerns have been raised that combining a major budget cut of $295 million for the Correctional Service of Canada and a commitment to build no new prisons with get-tough-on-crime legislation will lead to more crowding and more violence inside the prisons. Cuts to training and counseling programs inside the prisons will likely lead to increased recidivism. In two other areas facing major cuts, the CBC and External Affairs, it has become clear that there will be considerable deterioration in the nature of the outputs delivered.

Let me be clear. I am not arguing that the federal government should not be making cuts. I am rather arguing that it should not be disingenuous in claiming that all the cuts can readily be handled through the elimination of slack and increasing back-office efficiency. Some of the cuts will result in reductions in front-office service and programs, and the government should have been more transparent about that. Mr. Flaherty delivered the good news on budget day, but the bad news will be trickling out for months and even years to come.

The Harper government’s credibility in this budget is not being helped by the Auditor General’s report on the procurement of F35 fighter aircraft, in particular the implication that ministers have been knowingly using costing that is grossly underestimated.

The second similarity between the federal and Ontario budgets is that both governments will be relying on their public servants to deliver the savings. While some instruments of government, most notably communications, rely primarily upon politicians, the budget involves program delivery, and that is primarily the work of public servants. Reducing spending while maintaining capacity will depend on the public service’s sense of professionalism, willingness to go the extra mile, and capacity to innovate.

Finally, a word about the budget politics of Ontario’s minority government. The Conservatives, by staking out their position of clear and vigorous opposition to the budget, have foregone any influence over it. Their eyes are on the next election, in which they hope to position themselves as the one party unequivocally in favour of economic growth as defined by their support for reducing the corporate income tax rate, and will label the Liberals and NDP as two peas in a tax-and-spend socialist pod. The NDP doesn’t want an election, but wants to be able to tell its supporters that it improved the budget. The McGuinty Government would like to accommodate the NDP as long as it can maintain a credible fiscal framework of gradually eliminating the deficit. My expectation is that all three parties will get something from the budget debate: the Liberals and NDP a wanted deal that averts an election, and the Conservatives a platform for the next election.

 

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