Ontario voters face a perplexing set of choices on Election Day, between a premier who promised never to raise taxes or run a deficit and two challengers who promise new spending when the province is running its worst deficits in history.
It’s not clear who the big winner will be on Thursday night. But it’s easy to predict the loser: the multi-million dollar cabal of government employees unions banded together with the building trades unions and a smattering of other labour groups under the charming banner of the Working Families Coalition.
The unions, both public and private, are gambling between $5 million and $8 million of their members’ money that they can extend their winning streak by returning Dalton McGuinty to office.
Unfortunately for them, the luck on their investment is about to run out, whether McGuinty is elected or not. If you look at any ad for an investment, the same fine print always appears at the bottom: “past performance is no guarantee of future returns.”
Premier McGuinty’s escape tunnel from the financial meltdown led to the bond market: by next year he will have issued more debt than all Ontario’s previous premiers combined.
As Bob Rae discovered, there comes a point where more borrowing simply isn’t an option. The longer you postpone the day of reckoning, the bigger the disappointment for your friends in government employee unions when the layoffs, pay cuts and “Rae days” arrive. Anybody making vacation plans for Athens?
Ontario government employees have been weathering the economic slowdown quite well. Consider the plight of teachers: in 2007 an experienced teacher working in a Toronto high school was earning just over $82,000 a year. Then came the financial meltdown of 2008, the ensuing recession and the biggest budget deficits in the province’s history. Thanks to an arbitration system engineered to cave in at the first sign of a union demand, teacher wages have soared 15.4 per cent. That same Toronto teacher is now earning $94,968.
But the taxpayer’s exposure to McGuinty-ism doesn’t end there. The government also pays $10,520 to the Ontario Teachers Pension Plan – a number that will rise in each of the next three years as the plan struggles to close a $17.2 billion shortfall. And then there’s $2,217.60 to cover the employer’s contribution to the Canada Pension Plan, $1,101.46 for employment insurance and $750.25 for the Workplace Safety and Insurance Board.
We’re already at $110,000 before we start talking about dental, contact lenses, laser eye surgery, prescription drugs, wellness counselling and the host of perks the McGuinty government offers its chosen ones.
Teachers are only one subset of the culture. Arbitration awards have worked similar magic for firefighters. The Ontario Provincial Police contract has lifted law enforcement costs to the same kind of unaffordable levels.
For now, the spigots of the Ontario treasury are open all the way, financed by $110 billion in borrowing – a mountain of new debt that will earn McGuinty the distinction of actually doubling the province’s total debt in his term in office, should he be re-elected on Thursday.
In 2003, as Ontario Liberal leader, Dalton McGuinty met with the Canadian Taxpayers Federation and signed our Taxpayer Protection Promise, vowing not to raise taxes or run a deficit. Understandably, he didn’t bother calling us this election.
McGuinty’s promises to government employee unions are only achievable with $40 billion in additional borrowing over his next term of office, on top of the $110 billion he’ already added to the public debt, according to his own budget projections.
It’s not going to happen. McGuinty has already hired former TD bank economist Don Drummond to provide him with a cost-cutting plan, to be delivered, naturally, after the votes are counted. Drummond has already told the media he thinks $10 billion of Ontario’s $40 billion health budget is wasted. And that’s just one example. Tory leader Tim Hudak and NDP leader Andrea Horwath will also soon realize their expensive promises will be tough to implement if they are given keys to the bare cupboards.
So send not for whom the bell tolls, Working Families Coalition. It tolls for thee.
And no, take it from us, Dalton won’t call you in the morning.
