Taking It To The Street

Roots of Liberal Party Woes In Strategic Political Decision Budget Must Be Balanced By 2017-18  


By Susanna Kelley

The recent announcement that Education Minister Laurel Broten will impose contracts on teachers that didn't agree to the government's demands for a wage freeze has, predictably, stiffened the opposition by their unions.

They're promising to go down fighting, or, if they win their court challenge against her legislation, not to go down at all.

Many plan to escalate the withdrawal of extra-curricular activities and other "work to rule" activities.

That means a lot of regular folk out there, those with children in the school system are going to be getting grumpier and grumpier.

At a certain point in labour disruptions, people don't care whether the union leadership or the teachers or the public servants or the government are to blame - they just want the problems fixed.

And God help the government that can't do that.

Add to that public crankiness, ticking off a big part of the coalition that helped the Liberals get elected in 2003, 2007 and 2011 - labour - and you've got a recipe that could spell Liberal defeat in the next election.

It's at the very least quite a political conundrum for the next Liberal leader.  

Could any of this have been avoided?

From a strictly political point of view - and we can get to the economics of it all later - the answer is yes.

All of this trouble with former Liberal supporters stems from a strategic, political decision made very early in this recent mandate by Premier McGuinty and his finance minister Dwight Duncan. 

They decided that the deficit absolutely must be balanced by 2017-18 or the Liberals could kiss goodbye to any chance of being re-elected, especially with a majority.

But was it a sound decision?

To be fair to the Liberals, it is important to note that the deficit was run up not by of flagrant misspending, but to join the rest of the developed world in stimulus spending to stop the global economy from collapsing in 2008-09. 

That near-collapse was brought about by corrupt practices that began in the financial sector on Wall Street and spread around the globe, bringing the world economy to the precipice of disaster.  In order to avoid that from happening, most western governments - including the federal PC's in Ottawa and the Liberals in Ontario, joined in major infrastructure spending to prop up the economy.

For example, federal finance minister Jim Flaherty and Stephen Harper brought down a budget with a massive $34b. deficit in January of 2009.  

In Ontario, Dalton McGuinty and Dwight Duncan ran a $16.7 b. deficit in 2010-11.

It's not really clear why the Premier and Mr. Duncan were so convinced balancing the budget by 2017-18 was so crucial, and in fact, as a Liberal political strategy it seems counter-intuitive. 

After all, it's not as if Liberals voters have supported the party on the basis of the deficit or debt situation in Ontario.

Those who worry about that issue usually vote PC.

The Liberal strategy had a whiff of desperation to it, and from that commitment has cascaded a plethora of subsequent decisions that has resulted in chronic bad press for the Liberals in the last two years.

First Mr. McGuinty asked economist Don Drummond to independently review how government services were delivered with an eye to balancing the budget.

Mr. Drummond was never granted the autonomy the government pretended he had.

For example, he was specifically told that his recommendations could not include looking at the revenue side of the equation, just ways that would result in lower spending.

Hence, unlike when Barak Obama won a second term promising tax increases for the wealthy, such an idea was simply not an option to solve Ontario's economic woes.

(The government was forced into accepting one tax increase. At the 11th hour, as the price of the NDP under Andrea Horwath pledging not to defeat the government's budget and cause another election, Mr. McGuinty agreed to a two percent surtax on income over $500,000 a year.)

But the Drummond Commission floated bad news trial balloons which were publicly batted down, one after the other, by Mr. McGuinty and Mr. Duncan, such as refusing to cancel full-day kindergarten and not agreeing to hold health care spending to two and a half per cent annually.

That constant focus on a shaky economic future lent an aura of permanent austerity to the Liberals.

And in the end, having made the Drummond Commission a toothless tiger, Mr. McGuinty and Mr. Duncan still needed major spending cuts to reach their goal.

The wages and benefits for those on the public payroll such as bureaucrats, teachers, nurses, and doctors became the next targets.

Mr. McGuinty demanded they agree to wage freezes.

Since they had not caused the economic meltdown, their backs went up, and they felt hard done by having to pay the price for it.

Still, some public sector unions bargained small wage increases rather than a freeze.

The eventual deal with the doctors was a saw-off.

But when it came to the teachers, the government played hardball. Accept a wage freeze by the year's end, Ms. Broten told them, or your right to strike will be taken away.

The teachers' unions felt it was a draconian and total betrayal of a government they'd helped elect.  They are challenging the bill in court.

Indeed, the symbiotic relationship between the Liberals and the teachers had worked well for years.

Teachers had been rewarded handsomely by the Liberals for their support, winning contracts that allowed them to get to the top of their salary grid - $90,000 a year - within ten years of teaching, and stay there until they retired.

That is a good salary in Ontario.

But when Ms. Broten turned, she turned with a vengeance. 

There was nothing she could have done more to raise a red flag in front of them than threaten to take away their right to strike for the next two years.

Having now used her big stick, now Ms. Broten has decided to repeal the legislation, which is kind of like a revolutionary government making guns illegal once they've shot the king.

If you listen closely, you can hear the footsteps of thousands of teachers leaving the Liberals in droves and thundering towards the NDP.

So where does that leave the Liberal leadership candidates who may eventually lead the party?

While several have said they would not have imposed Bill 115 (Gerard Kennedy and Eric Hoskins), all but one have toed the line that the deficit absolutely must be balanced by 2017-18.

That would seem to indicate that if they won the leadership, the austerity strategy will continue.

The only one who has deviated significantly, from that is, again, Mr. Kennedy.

He says he will wait to see what kind of shape Ontarians are in to decide whether to balance the budget in 2017-18.

Kennedy, who was not a member of McGuinty's government and obviously questions the strategy, actually holds the position truer to the Liberal party's Keynesian economic philosophy.

Paying if off a little more slowly, he seems to be saying, will still get Ontario to the same place but with a little less pain.

A former PC cabinet minister once told me strangling the government to achieve fiscal prudence too quickly is like selling your house to pay off your mortgage.

You'll be debt free, but you're living on the street.

Which is where the strategic decision by Mr. McGuinty and Mr. Duncan, with its ironclad commitment to balancing the budget by 2017-18, may leave their party in the next election.

You can find Susanna here: 

About Susanna Kelley

Susanna Kelley is Editor-in-Chief and Queen’s Park Bureau Chief for Ontario News Watch. A veteran political and investigative reporter, documentary-maker, host and media commentator, Susanna oversees and has final editorial control over all news production at Ontario News Watch. Susanna has reported for the CBC, the Canadian Press and served as Queen’s Park Bureau Chief for TVOntario for 13 years. She has also hosted a number of documentaries for CBC’s The Current, CBC Radio News and TVOntario’s Studio 2. Passionately dedicated to excellence in political journalism, and having covered both Parliament Hill and Queen’s Park, Susanna believes quality political reporting is essential to a healthy democracy. You can find Susanna here: @susannakelley
Posted date : January 07, 2013

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