What Tory backpedalling means for Ontario’s budget deficit

OPINION: The Progressive Conservatives have staked their credibility on major spending cuts — but, for the third time since taking office, they’ve backed down in the face of public outcry
By John Michael McGrath - Published on May 27, 2019
Ontario Premier Doug Ford and MPP Steve Clark
Premier Doug Ford and Minister of Municipal Affairs and Housing Steve Clark announced at Queen’s Park on Monday the reversal of certain cuts. (John Michael McGrath)

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Less than 48 hours ago, it was full steam ahead: the Progressive Conservative government was committed to its spending cuts. Political staffers at Queen’s Park spent their weekend tweeting  at Toronto mayor John Tory, who had committed the sin of knocking on doors in the city he represents in order to explain to residents the impact of provincial spending cuts. That the government’s spin largely relied on trying to convince people that the former leader of the PC party was an unrestrained spendthrift gives some sense of the shape and size of the hole they’d dug themselves into.

Well, a weekend is a long time in Ontario politics. And, on Monday morning, Premier Doug Ford and Minister of Municipal Affairs and Housing Steve Clark waved the white flag. After weeks of trying to defend retroactive spending cuts that “started” on April 1, before the Ontario budget was even presented, the government is backing down — kind of. It will be maintaining spending for land ambulance, public health, and child care this year. Municipalities will have some measure of stability for the 2019-20 fiscal year. But cuts planned for future years are still on the table, and some of this year’s cuts aren’t being reversed: cities still won’t get an increased share of the gas tax, something that was promised by the Liberals, and changes to development charges that could have a huge impact on municipal finance are unaffected.

“We’re going to maintain the funding throughout this year,” the premier told reporters at Queen’s Park. “Every mayor I’ve talked to said they can find savings, so that’s good news, but they said they needed more runway.”

“We all need to work together,” Clark said, adding that “the status quo just is not longer acceptable.”

The premier was conciliatory, acknowledging that the government doesn’t get it right “1,000 per cent of the time.” But it’s hard to square this tepid apology (Ford later skipped question period and so didn’t have to justify the about-face to MPPs) with the idea, promoted by the Tories over the past couple of weeks, that Toronto and the rest of Ontario municipalities — which are in objectively tougher financial straits — were basically just whining.

This is the third time since taking power that the Tories have dug in their heels over spending cuts, accused their antagonists of being dishonest or unserious about fiscal restraint, and then eventually surrendered in the face of broad public opposition. There were the changes to the province’s autism-therapy funding; there was the government’s hastily announced funding to try to stop teacher layoffs at boards of education. Now this.

It raises a couple of pretty basic questions: Do the Tories understand their own spending plan? And are they actually committed enough to it to see it through?

The nature of modern politics means that it’s tempting to personalize this — to make the government’s problems Ford’s fault, just as many conservatives imagined that all the stuff they didn’t like about politics before 2018 was Kathleen Wynne’s fault. But the mess the Tories find themselves in is, for the most part, one that any conservative party could have found itself in.

The Tories inherited a deficit, and most of their early moves succeeded only in making it worse: according to the Fall Economic Statement, the changes the Tories made — reversing some income-tax hikes, cutting the cap-and-trade system — cost the government $1.8 billion, and that’s not even accounting for other costly changes, such as the low-income tax credit. It was the spring budget that gave us a real sense of the nature of the government’s deficit-fighting plan: keeping spending growth at historic lows for the entirety of its mandate. (That sense was confirmed by the Financial Accountability Officer last week.)

This is the kind of goal that any Tory government might land on, but following through on it is harder than it sounds. The thing about government spending is that it can “grow” in an arithmetic sense while manifesting as “service cuts” in the real world. If education spending doesn’t go up by enough to cover inflation and the growth in student numbers, school boards will need to lay off teachers and increase class sizes. And outright cuts — cuts of the kind the Tories were proposing for municipalities and still plan to introduce next year — make the situation even worse.

All of these fiscal conditions are well-established; all of these results were predictable. They certainly shouldn’t come as a shock to someone like Finance Minister Vic Fedeli. We’ve mentioned before that Fedeli has said he wants to get the hard work of deficit reduction done early. But that work was always going to be profoundly unpopular once the budget abstractions made it to the real world.

Did the Tories not understand that? Or, after 15 years out of power, were they simply not prepared for the level of opposition they’d face?

It’s tempting to explain the government’s most recent reversal by pointing to the polling numbers, which are, in fact, pretty dismal. So perhaps this is just belated political self-preservation. Whatever the case, the events of the last few weeks pose a pretty big problem for the Tories. They’ve staked their credibility on balancing the budget. The issue is whether they’ll actually be able to stick to their guns for the next three years to see it through.

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