Friday, March 26, 2010

Ontario Budget Another Disaster

The Ontario Government released the annual budget. In it they tried to explain the reason for the disastrous state of the provinces finances.

Sensing the wrath across the country over a  public sector gone wild, the government set in motion a series of sleight of hand tricks. The words sounded good but the actions did not back the rhetoric. Once again the taxpayer is being heaped with taxes to protect the public sector compensation package.

Ontario government moves to contain public-sector wages

The front page headline from the Globe and Mail is exactly what the public wanted to hear. Upon further inspection it was a devious slight of hand. The article shows how the government will be controlling labour costs and save $375 Million over each of the next 2 years.

James Daw of the Toronto Star points out what really is happening with public sector compensation. The budget notes show that costs for the Ontario Teachers' Pension Plan and other pensions and benefits will be $1.627 Billion this fiscal year, up $754 million in the past three years. So it appears that even though a few dollars might be saved by some salary freezes the total compensation spending spree continues unabated. 

It appears that rather than directly paying the public sector employees. Employees now get the money through a back door pension contributions. This is better for the employees too as direct wages are taxable but pensions are "non-taxable".

Lack of Leadership

In the fight to control compensation as the single biggest expense of the government, McGuinty and crew failed to show leadership. The Globe points out: 

 The new wage law will take effect immediately and will apply to all organizations covered by provincial salary-disclosure rules with the exception of municipalities. That exclusion, characterized as a policy decision to reflect municipality’s status as a separate level of government, also allows the province to avoid a showdown with the powerful police and firefighters’ unions.

Protecting friends at the expense of all 

One project that was shelved in order to cover the increased contributions into pension was Toronto's transit expansion. Either it was money for public sector pensions or infrastructure. Since infrastructure does not vote the money is going to pensions. Budget slashes billions from Toronto transit expansion

Why should things change now? Statscan shows that Canada's infrastructure is valued at $290 Billion but over the same period of time taxpayers have accumulated about $ 555 Billion into public sector pensions. So it was no surprise that more money being poured into the pensions of the pension class trumped infrastructure investments.  

Well at least there were no surprises in the budget. It is business as usual in Ontario.

1 comment:

  1. Pls explain more re otpp... Higher contribution rate?? 1 time cash injection??