Wednesday, June 11, 2014

Ontario's next expense scandal: Endorsement and Condemnation

Tomorrow, Ontario votes to elect its next government.

It's been an interesting campaign for me, particularly because of some thoughts on the province's electoral politics I worked through writing on the last election, in 2011, and an ongoing interest in the relationship of numbers and narratives.

election results -
 as share of possible votes
My perception of provincial election campaigns are shaped by statistics on the share of possible votes (registered voters) achieved by parties. After 2011's election I began Lessons From Ontario's Record Low Election Turnout with:
One of Ontario’s 3 main political parties had a lower percentage of eligible voters opt for their party than had been the case since 1943.
That party won.

My premise has been that Ontario elections have been more about attracting voters, not moving the votes of voters from one candidate to another. This hasn't been true at the federal level, where the split in the Conservative movement returned successive majorities to the Liberal party, and it's not entirely true provincially, but the provincial conservatives should be able to win an election only by getting most of the people who vote Conservative federally to show up and do so provincially.

The NDP's leader, Andrea Horwath, essentially initiated this election call in a news conference where she announced her party would not be supporting the budget introduced by the governing Liberals, led by Kathleen Wynne. I thought the rejection was based on a very sound premise as Horwath stated she had lost faith in Wynne after Wynne's government had failed to deliver on the promises made to capture NDP support for the previous year's budget.

I think it's fair to say Toronto's mainstream media don't write about integrity (too quaint a concept), and Horwath continues to be presented as defeating an NDP-friendly budget for no particular reason. I think that media obstacle, along with a lack of policy work between elections, and probably money, have been the main impediments to her campaign.

Unlike in 2011, when I described an early campaign appearance as "Harakiri with a bicycle", Horwath has followed a script attaching her political philosophy with that of previous fiscally responsible NDP governments, in Saskatchewan and Manitoba.
While I feel Horwath's performance should be appealing to more people this campaign, I also always liked Howard Hampton - perhaps I'm just not a very good observer of parties on the left.

I'm certainly no fan of the incumbent government, and I really hadn't given much thought to how they, or any other incumbent, might run a campaign.  In general, I think there's a "things are good" narrative (Its morning in America again), and perhaps there's a variation that the jurisdiction is strong and just experiencing a cyclical rough patch (more fun example - "the roots are not severed..all will be well").

The 2014 campaign storyline has been dominated by Progressive Conservative (PC) leader Tim Hudak and, in particular, 2 messages:
  1. "a plan that will help create one million jobs over the next eight years."
  2. "Decrease the number of positions on the government payroll by 100,000, about 10 per cent"
A promise to eliminate the large annual deficit, in fighting the burgeoning provincial debt, is relevant to the promise to decrease jobs.

Hudak shocked a lot of people with these large numbers, and the mainstream media, particularly in Toronto, have been quite asinine in commenting on them. In terms of the relatively short messaging successful politicians need to develop, I'd suggest using numbers that are "a lot" is superior to saying we are going to cut "a lot" of public sector jobs and we are going to facilitate the creation of "a whole bunch" of private sector jobs.
Maybe I'm wrong on that too.

A million jobs over 8 years is not an uncommon number for Ontario recovering from a recession. In 2009 the Liberal government was touting a study by Jack Mintz that their taxation changes, featuring a reduction in the Corporate Income Tax (CIT) from 14 to 10 percent, would create nearly 600,000 jobs over 10 years. Add that onto a baseline of 500,000 and 1 million jobs added over 8 years is a relatively pedestrian promise.

I have worked with Statistics Canada data, to filter public sector jobs out from total employment figures, in order to see how cutting public sector jobs has impacted overall job creation.
One quick message from the data; in the periods public sector job growth exceeds private sector jobs growth, there are large provincial deficits and growing debt.

In the recovery that coincided with the years Conservative Mike Harris was Premier, the private sector recovery was well underway before public sector job growth returned - and the decline in public sector employment was well underway prior to the election of Mr. Harris.

Some quick math says that 100,000 jobs at a cost of $100,000 a job is $10 billion - which is not quite what the annual deficit is, but getting there.

Whether it was wise for Mr. Hudak to make a point of the job cuts is another matter. When an election can be won with less than 1.8 million votes, discouraging the 1.1 million voters employed in the public sector from supporting you is a bold move.

Some commentators do understand that significant cutbacks will occur regardless of the election results. OPSEU boss "Smokey" Thomas has demonstrated he understands, and a Bloomberg article titled Wynne’s Budget Fortells Biggest Ontario Cuts Since Harris also comprehends that which must happen eventually will.[1] 

I reviewed the numbers behind a graphic I'd prepared for a post on 2011's election, showing the PC's planned spending on Health and K-12 Education well below the estimated expenditures; the requirements of restraint now indicate that the Changebook plan is in line, if not slightly above, the subsequent levels of actual expenditures and current spending plans of the Wynne government.
This likely wouldn't surprise the Secondary School teachers' union, who are preparing for a strike regardless of the election outcome.

This would, no doubt, come as a surprise to readers of the Province's most read, and possibly its worst, media entity. Chief propagandist at the Liberals' main propaganda tool, Martin Regg Cohn, writes "on the eve of Thusday's election finale":
If you want Ontario’s next government to cut spending — by cutting the public sector and cutting services (they tend to go together), then vote for Hudak’s Progressive Conservatives.
No. That's wrong.
Cuts will happen regardless of who you vote for. If you want the debt to be ignored a while longer while putting off the inevitable, then vote...

Integrity means, to me, that one is both honest about what they intend/propose, and capable of fulfilling the obligations they accept.

I think only the PC's offer a platform that is intended to address issues that exist and need to be addressed. I certainly don't agree with all claims, or even the philosophy, in their entire platform, but it is coherent.

I will be voting for my PC candidate.

I have no reason to doubt Andrea Horwath's sincerity in offering a fiscally responsible, socially conscious government - but I don't feel her party developed serious policies between election periods that would give voters confidence the NDP could deliver on Horwath's promise.

I see no evidence the incumbent Wynne government can accomplish anything aside from the creation of more scandal. When challenged on electricity costs, she notes policies she's introduced seemingly with knowing the actions will raise electricity costs for residential consumers; when challenged on where savings might be found in government, she mentioned some new expenditures she's like to take on.
The McGuinty team was adept at buying the party support, and the Wynne team seems to be carrying on with that tradition as it prepares to saddle the preposterous MaRS debacle onto taxpayers.

None of the known expense scandals are likely to impact Ontario's fiscal health as much as a Wynne victory would. . The Bob Rae NDP government was forced to address spending because rating agencies repeatedly downgraded Ontario's debt rating; warnings have recently been served that Ontario's debt rating will be lowered due to its inability to contain its deficit under the Wynne government. Jack Mintz,the economist the Liberals were so found of 2009, before Wynne abandoned the tax strategy he endorsed, writes that each "additional point increase in Ontario’s interest rate will add another $3-billion in interest cost on gross debt," but that's only true on the portion of the ~$300 billion debt that needs to be refinanced, so a $400 million a year figure has also been cited.

And that $400 million occurs in the next year too, while another $400 million is added, and so on until somebody is found to control cost and regain the respect of the financial industry.

The additional financial costs of having a government delaying serious action on balancing Ontario's books until ratings downgrades spur action is known well enough; the cost will dwarf the gas plant relocation deal and whatever expense the Liberal government's play on MaRS reaches.

If you vote for the incumbent government tomorrow, you will be Ontario's next expense scandal.


1. An interesting thing about the Bloomberg post is the endnote, where Edward Greenspon is cited as one of the "editors responsible for this story." Greenspon was once an editor-in-chief of the Globe and Mail, but was last seen The Toronto Star blaming the election of Rob Ford on exurbs.

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