McGuinty to lay groundwork for austerity - Metro US

McGuinty to lay groundwork for austerity

TORONTO – Premier Dalton McGuinty will lay the groundwork for his cash-strapped government’s austerity plans in a major speech Tuesday, while the province braces for the actual cost-cutting blueprint from his advisor Don Drummond next month.

McGuinty’s speech to the Canadian Club of Toronto will make a direct link between the need to stay on track to slay the province’s $16-billion deficit and the need to grow the economy and create private-sector jobs, said a senior government source.

The premier won’t go into specifics about what kinds of cuts may be looming on the horizon, but he will talk about new steps that will be taken to reduce the red ink and why it’s critical to stay on target to eliminate the deficit altogether by 2017-18, the source said.

McGuinty will urge businesses to do their part by investing again in the province and creating jobs now that his Liberals have helped lower their costs by cutting the corporate tax rate to 11.5 per cent and streamlining the tax system with the HST.

Health Minister Deb Matthews will follow the premier’s lead next week by talking about the goals and targets she has for reforming the health-care system, the source said. Finance Minister Dwight Duncan will also talk about reining in government spending, but again, there’ll be no specifics.

Drummond, a former TD economist and federal finance official, has publicly mused about having fewer Caesarean sections and hysterectomies performed in Ontario, as well as removing arthroscopic knee surgery from the Ontario Health Insurance Plan.

But the source said Matthews won’t delve into specifics and will instead talk about making the health system more integrated between hospitals and community-based care.

Drummond isn’t expected to release his report until mid-February, about a month before the provincial budget. But he’s already warned that he’ll make some difficult and unpopular recommendations for the province’s public services.

Some ministries may be facing spending cuts as deep as 30 per cent as the province struggles to staunch the flow of red ink while capping increases in health and education at three per cent a year.

However, McGuinty has suggested he may not follow through on all of the several hundred recommendations Drummond is expected to make.

Drummond’s job is to “advise,” while the government’s responsibility is to decide, he said earlier this month.

All the talk about Drummond’s report has people thinking about new ideas and new ways of doing things, the source said. It has changed the tone of pre-budget talks, as stakeholders realize their annual requests for more money will likely fall on deaf ears.

The Ontario Hospital Association, for example, has already talked about how community-based care should be a higher funding priority.

Whatever path the Liberals choose, they’ll also need a strategy to get their austerity measures passed in a minority parliament.

It may involve giving in to a demand from one of the opposition parties, which collectively hold more seats than the Liberals in the legislature.

The New Democrats want McGuinty to cancel a planned corporate tax cut next year that will lower the rate from 11.5 per cent to 10 per cent. The premier has left the door open to that idea, but has refused to say whether it will be in the budget.

The Progressive Conservatives are clamouring for a legislated public sector wage freeze — a proposal the Liberals say is out of the question.

Opposition Leader Tim Hudak also wants government services to be privatized where possible, or at least force government unions to bid on contracts against private companies, non-profits, charities and municipal agencies.

“If you can find it in the phone book, if it’s delivered by somebody else, open it up to competition,” he said Monday.

“The first test you should have: should government be in this business at all? We need to start separating out the must-haves from the like-to-haves.”

That could jeopardized the quality of Ontario’s public services and reduce well-paying jobs that other industries — like restaurants and small businesses — rely on, said New Democrat Jagmeet Singh.

“Everyone would be impacted negatively,” he said.

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