Proof: Tim Hudak's PCs Would Continue to Run Massive Deficits

If your intelligence is not yet insulted by Ontario Progressive Conservative (“PC”) party leader Tim Hudak’s claims that he will fight the deficit by finding “waste in the system”, it should be by the time you finish reading this article. As the October 6, 2011 Ontario provincial election approaches – and as Hudak does his damnedest to pretend that he would be fiscally responsible were his party to form the next government – the voter would be well served to arm him or her self with the key budget numbers and with a proper understanding of the political implications of those numbers. To that end, I trust the following will prove empowering.

Last December, as Ontario’s Liberal and PC MPPs began a 10 week winter vacation, they each proposed spending cuts to “fight” the deficit. They proposed essentially the same thing: reviewing Ontario’s agencies, boards, and commissions (the so called “ABCs” of government), looking for inefficiencies, and then deciding what to do to reduce them (e.g., cuts, mergers of agencies, etc). In the case of the Liberals, they proposed an actual target: a 5% cut. Tim Hudak’s PCs did not even say how much they would cut, never mind disclosing what they would cut from ABCs.

Just last week, Hudak lifted a plank from Andrea Horwath’s openly socialist New Democratic Party (NDP): he announced that, were he handed the reins of power in October, he would not charge the 8% provincial portion of the HST on electricity bills. When asked on London, Ontario’s biggest morning radio talk show how he would make up for those lost revenues, he replied that he would eliminate “waste in the system”, and he (as per usual) cited the example of ehealth (two years ago, an Ontario auditor’s report said that, despite about $1B having been spent by successive PC and Liberal governments, there was little yet to be shown for it, in terms of having an operational electronic database of patients’ health records). Noting that actual waste (e.g., excessive bonuses, etc., as opposed to the obvious front-loading of the costs of developing software and supportive hardware) in Ontario’s ehealth system (which, incidentally, is now operational to some extent) is only a small fraction of the $1.2B cost of exempting electricity from the 8% provincial portion of the HST, the hosts asked where the rest of the $1.2B would come from. Like a talking doll that has just had the string in its back pulled, Hudak robotically delivered the same canned answer he gives whenever he lacks any real answer, but needs to create the impression that there are billions of dollars wasted in the ABCs of government. The script of his answer is this:

“Let’s look at these Agencies, Boards, and Commissions. ‘Cause, honest to God, you could take any three letters of the alphabet, put them in any order you want to, and your going to get some agency, board and commission you’ve never heard of, but you’re paying millions of dollars a year to sustain. And, you put an “e” in front of it, it’s into the billions.”

Sometimes, when he chirps out that statement, Hudak will conclude that he would require each of the over 600 ABCs to “justify their existence and, if they can’t, they’re gone”. He never says what would make the existence of an agency, board, or commission “justified”. He never explains how he would balance the budget were all or most of those agencies, boards and commissions to justify their existence. In fact, the only particular ABCs he names for elimination are the Local Health Integration Networks (a.k.a., the “LHINs”) and the Ontario Power Authority (each of which is essentially a ministerial delegate that serves primarily as a political firewall, so that bad decisions and health care spending cuts can be blamed on the delegates, instead of upon the Minister responsible). Perhaps that is because the idea of eliminating ABCs becomes much less politically feasible when one actually identifies the fact that they include ten Boards of Management for Homes for the Aged and Rest Homes; Councils for dozens of professional Colleges (Nurses, Chiropractors, Pharmacists, Veterinarians, etc); the Fire Marshal’s Public Fire Safety Council; twenty five Health Unit Boards; Ontario’s Human Rights Commission and Human Rights Tribunal; et cetera.

That, dear reader, is the extent of the Hudak PCs’ plan to balance the budget, or to pay for his $1.2 HST exemption, or to pay for the $6.1B of increased health care spending that he announced on May 24th, 2011. Instead of telling Ontario what he would cut, and by how much, he offers up only canned, ambiguous answers. Worse: when face to face with a journalist (e.g., Sean Mallen, former host of Global TV’s “Focus Ontario”) asking him how he will balance the budget or pay for his election promises, Hudak will routinely offer up his canned script, pretending that it is an impromptu answer. To see what I mean, watch this little collection of video and audio snippets in which Hudak uses his “ABCs” script in TV interviews, at speeches, and on radio interviews. After watching it, I’m sure you’ll agree that Hudak’s whole canned-answer tactic drips with cynicism and contempt for the interviewers and audiences.

Now, it is important to realize that, though neither the Liberals nor the PCs have given the public sufficient particulars to know what they would cut as “waste”, or which Agencies, Boards, and Commissions they would shrink or eliminate, one does not need such particulars to conclude that it is impossible to balance the budget by such methods unless one is willing to make cuts to health care, education, or welfare. To see what I mean, consider the 2010-2011 interim figures set out in Table 28 to the 2011 Provincial Budget.

Total Revenues: $106.185 B

Total Expense: $122.8712 B

Deficit: $16.686 B

Now, subtract from Total Expense (see Table 25) all of the Expense for the various third-rail / untouchable / politically-explosive ministries and unavoidables:

– Health and Long Term Care ($44.9495 B)
– Health Promotion and Sport ($0.3941 B)
– Training, Colleges and Universities ($6.8266 B)
– Education ($22.2086 B)
– Community and Social Services ($9.2345 B)
– Interest on Debt ($9.5270 B)

Total expense for those 6 items: $93.1403B.

Therefore, after removing those six items from the budget, Total Expense for all other ministries *combined* is: $122.8712 B minus $93.1403 B = $29.7312 B. The deficit in the same period is represented, in the budget, to be: $16.686 B. Therefore, $16.686 B / $29.7312B x 100 = 56.1% of Ontario’s 24 other ministries included in the budget (i.e., all ministries other than the health, education, and welfare ministries listed above), are paid for with entirely borrowed money. Put another way, to balance the budget without touching health, education, or welfare, the government would have to close down entirely an average of 24 x 56.1% = 13.5 Ministries altogether. Put yet another way, 13.5 / 24 x 100% = 56.25% of the government’s other ministries would have to be closed just to balance the budget. Gone would be such government functions as justice, children’s services, finance, revenue, tourism, transportation, aboriginal affairs, citizenship/immigration, energy, environment, etc..

Now reconsider Hudak’s line about balancing the budget by eliminating some Agencies, Boards, and Commissions. The vast majority of Ontario’s ABCs have budgets so small that they do not need to be reported in Ontario’s Public Accounts. More to the point: the funds extended to the Agencies, Boards, and Commissions are not paid out separately from money paid to the Ministries. Rather, the ABCs are funded by the Ministries to which they report (for example, the operating budgets of the Assessment Review Board, the Ontario Municipal Board, the Ontario Human Rights Commission, the Human Rights Tribunal of Ontario, the Human Rights Legal Support Centre, and the Law Commission of Ontario totaled approximately $43M for the year ending March 31, 2010, and all of that money was paid by the Ministry of the Attorney General out of its own budget). So, no matter which criteria Hudak was to use to determine whether or not an ABC’s existence is “justified”, and no matter how many ABCs he reduced or eliminated, he would either be making reductions to health care, education, and welfare, or he would be left trying to find $24B (i.e., $16.7B deficit, plus $1.2B HST exemption, plus $6.1B health care spending increase) worth of waste out of total government expenditures (not including health, education, welfare, or interest) of $29.7312B. In other words, it would have to be the case that $24 B / $29.7312 B x 100% = 80.72% of all of the money spent by all government ministries (other than health care, education, and welfare ministries) is pure waste.

Without increased revenues – and even Hudak claims that tax increases are not an option – there is simply no way to balance the Ontario provincial budget unless (a) health care, education, and/or welfare ministries are subjected to major spending reductions, or (b) health and/or education cease to be tax funded. Yet there are no increased revenues on the horizon, and health, education and welfare expenditures are the very expenditures that Hudak says he refuses to cut if his PCs form the next government. So, if Hudak were to keep his promise, and to actually increase spending for things like health care, education and welfare, he would have to run deficits, just like the Liberals whose vacant seats he wants his party to fill; he would have to keep burying Ontario in debt; he would have to govern as a Liberal.

Conclusion: Hudak’s claims that the budget can be balanced by “eliminating waste in the system” or by making ABCs “justify their existence” is either self-delusion or deliberate misinformation. Either Hudak lacks the knowledge needed to govern, or he is play acting, and intends to make you believe that he has actual plans to balance Ontario’s books when, in fact, he has no plan for balancing the budget, and no intention to balance the budget by making cuts. In short: he suffers either from ignorance or from dishonesty. Each of these traits rightly disqualifies one from assuming the office of Premier.

According to reports, at the PC’s annual convention this coming weekend, Hudak will be getting into greater detail about how he would balance the books. My bet: a major chunk of his explanation will assume huge increases in revenue due to a hoped-for economic recovery. Did I mention that budgeting according to blind faith also rightly disqualifies one from assuming the office of Premier?