Wednesday, February 15, 2012
Drummond report on Ontario calls for cutbacks CBC News Posted: Feb 15, 2012 5:06 AM ET
The Ontario government must curtail its spending with the kind of cuts not seen since the Mike Harris years, according to a report by former TD Bank chief economist Don Drummond.Released Wednesday, Drummond’s report calls for extensive spending reductions and warns that without his recommended belt-tightening, the province will face a crippling $30-billion deficit by 2017-18.Drummond warns that failing to follow such severe austerity measures could cause Ontario’s debt, which currently stands at $215 billion, to balloon to more than $411 billion in five years.
The long-awaited report from Don Drummond was released Wednesday.The long-awaited report from Don Drummond was released Wednesday.To avoid this and balance the books by 2017-18, Drummond outlines hundreds of recommendations in his 540-page report, which he calls a wrenching reduction from the path that spending is now on.His recommendations include everything from moving more patients away from hospital care to cheaper forms of health care. He also calls for increases in school class sizes, tighter controls over public-sector wages and moves to curtail the underground economy.He said the moves are necessary if Ontario is to escape its recent history of rising public debt that forces the government to spend more than it should on interest payments.
He also admits the cuts will be painful.The government will have to cut program spending more deeply on a real per capita basis and over a much longer period of time than the Harris government did in the 1990s,he writes in the report.Key to meeting the target is capping annual increases in health-care spending at 2.5 per cent, something Drummond said no jurisdiction has achieved in the past 30 years.Health-care spending in Ontario currently rises by almost seven per cent a year.Drummond wants to see more home-based care and a move toward cheaper health-care providers, such as nurse practitioners and personal support workers instead of doctors.In education, Drummond calls for annual spending increases capped at one per cent and says current increases of three to five per cent a year are not sustainable.He calls for cuts to non-teaching positions and suggests school bus service be subject to user fees and be opened up to competitive bidding.Drummond also wants the Ontario Child Benefit held at $1,100 per child, per year, instead of allowing it to rise to the $1,310 called for in the 2011 budget.Other measures call for the province to boost revenue by clamping down on the underground economy, and allowing slot machines in more locations.
He also wants the LCBO to consider expanding locations and wants the Ontario Lottery and Gaming Corporation to fold its two head offices into one while closing one of two casinos in Niagara Falls.Leading up to the release of the report, the government hinted it was free to choose which of Drummond’s recommendations it will adopt.For example, Drummond calls for the elimination of all-day kindergarten, which the Liberals have already said they will not do.Drummond, however, says failing to follow his recommendations means the government will have to find the money elsewhere, either through new taxes or other spending cuts.Our recommendations can deliver the needed degree of spending restraint to balance the budget by 2017-18 only if all are implemented, he writes.We expect that many of our recommendations will be rejected. We accept that, but each rejected recommendation must be replaced not by a vacuum, but by a better idea, one that delivers a similar fiscal benefit.
Gloomy Drummond report calls for overhaul to Ontario health care, education-elizabeth church Globe and Mail Update Published Wednesday, Feb. 15, 2012 2:28PM EST Last updated Wednesday, Feb. 15, 2012 2:40PM EST GLOBE AND MAIL.
Get ready for a new reality, Ontario.A sweeping report on the financial health of Canada’s largest province calls for a major rethink of an economy long regarded as the engine of the country’s growth.The highly anticipated report delivered Wednesday by economist Don Drummond warns that Ontario is in the midst of a sea change driven by the decline of its manufacturing sector and shifting demographics.The prescription is a massive cost-cutting plan, a laundry list of austerity measures delivered in a 532-page report, a brick, in Mr. Drummond’s estimation. Its 362 recommendations range from broad reforms such as a culture shift in health care to focus on health promotion from the existing after-the-problem treatment model to nitty-gritty details, such as a call for commuters to pay for parking at GO Transit stations.In total, the work of the four-person panel amounts to a wake-up call to the province and the politicians who govern it – one it concedes could take some time to sink in.Our message will strike many as profoundly gloomy. It is one that Ontarians have not heard, the report cautions at the onset.The days of relying on economic growth to solve the province’s fiscal problems are over, Mr. Drummond warns. We don’t think the previous growth rates, unfortunately, will come back,he told reporters.If left unchecked, Ontario’s deficit will swell to $30.2-billion by 2018, or more than double last year’s figure. In order to correct that course, the report says annual spending growth must be held at 0.8 per cent over seven years – a target that given population growth and inflation actually will require a 16.2 per cent cut in program spending over that period for every man, woman and child in the province.As well as its list of prescriptive measures, the report raises two key themes, the need to make policy decisions based on evidence and the need to integrate public services – everything from social assistance to provincial real estate holdings.
This is not the first time a Canadian government has embarked on such a belt-tightening endeavor, Mr. Drummond said. But this time around the province has told indicated raising taxes is off the table and the report recommends that no cuts be made to social assistance rates, as they were under the Mike Harris government.
With those caveats, Mr. Drummond said his report would sent the province into largely uncharted waters. I think it would be fair to say it would be unprecedented in the post war period in Canada,he said.
The report’s major recommendations include:
The bulk of the report – like the provincial budget – is devoted to health-care reforms. Health-care spending accounts for more than 40 per cent of the provincial budget.
-capping annual increase to health-care spending at 2.5 per cent.
-shifting treatment from hospitals to clinics and homecare
-shifting services to lower cost caregivers where possible and making more use of nurse practitioners
-favours revamped Local Health Integration Networks, tightly integrated with Community Care Access Centres and with clear accountability structures.
-linking CEO and executive compensation to health outcome targets
-Funding should grow at 1 and 1.5 per cent respectively for primary and postsecondary education, far below the current 3 to 5 per cent
-Full-day kindergarten should be scrapped, but as the government has already refused this advice, its implementation should at least be delayed three years, and staffing trimmed
-Class size caps should be relaxed, to 23 students in primary classes, and an average of 22 to 26 in later years
-Salary increases must be modest, and pensions may need to be jointly managed
-Seventy per cent of 13,800 non-teaching jobs created since 2003 should be scrapped, as should 25 per cent of funds for textbooks and classroom supplies
-Universities should sign individual mandate agreements, tying funding to goals, outcomes and graduation rates, and be forced to differentiate more
-The province needs federal help closing the wide gap in on-reserve education funding, and should join First Nations in forming new entities with powers similar to a school boards Labour
-The report does not recommend wage freezes, calling them ineffective
-More centralized bargaining in the public sector
-More flexibility for the public sector workforce including changes to bumping provisions.
-Most of the report focuses on restraint, it estimates $2-billion in new revenue can be found in areas such as contraband tobacco, the underground economy, collections issues, tax expenditures and additional income from Crown agencies.
-It also calls for an honest discussion about revenue solutions such as road tolls, congestion charges, regional gas taxes, parking surcharge and a review of user fees.
With files from Tavia Grant and James Bradshaw
Drummond Report: Higher hydro bills, more user fees urged in sweeping report Published FEB 15,2012STEVE RUSSELL/TORONTO STAR
Robert Benzie Queen’s Park Bureau Chief
Gloom — or doom.
Ontarians could face higher hydro bills, bigger school classes, fewer hospitals, more expensive tuition and user fees to protect the future of provincial public services.That’s the grim message from Don Drummond, chair of the commission on public-service reform.His two-volume, 665-page report delivered Wednesday is so weighty that a table collapsed when Ontario Provincial Police officers unloaded copies in the media lock-up.Ontario faces more severe economic and fiscal challenges than Ontarians realize, Drummond warned.We can no longer assume a resumption of Ontario’s traditional strong economic growth and the continued prosperity on which the province has built its public services, he said.Our message will strike many as profoundly gloomy. It is one that Ontarians have not heard, certainly not in the recent election campaign, but one this commission believes it must deliver.While Premier Dalton McGuinty struck the Drummond commission in the March 2011 budget, the need for drastic cuts was rarely if ever broached by the Liberals, Progressive Conservatives or New Democrats in the Oct. 6 election.All the major parties agreed that the deficit, which sits at $16 billion this year, could be eliminated by 2017-18 relatively painlessly.Not so, warned Drummond, who projected the deficit would balloon to $30.2 billion in 2017-18 unless spending growth is radically curbed.
As first disclosed by the Star, overall increases must be capped at 0.8 per cent per year through 2017-18.Health care spending, up an average of 6.3 per cent annually over the past five years, must be held to 2.5 per cent growth.But Drummond admitted not one jurisdiction in the world over the past 30 years has managed to keep health costs to even that annual rate.Primary and secondary education costs can rise only 1 per cent with colleges and universities going up 1.5 per cent and social programs just 0.5 per cent.Everything else the government funds must be reduced by 2.4 per cent per year.Reform must be pervasive and speedy. The government will need to implement all the reforms we recommend … to restrain the growth of program spending enough to achieve balance by 2017-18, he said.With 362 recommendations — 105 on health alone — there is much for McGuinty’s Liberal government to digest.Senior Liberal officials, speaking before Finance Minister Dwight Duncan was to meet with reporters later Wednesday, confided much of Drummond’s report would be taken under advisement.Some of its tenets will be introduced in Duncan’s budget next month or are already under way with Health Minister Deb Matthews’ reforms announced two weeks ago.But Liberal insiders told the Star that the report presents a worst-case scenario that could give the government political cover when less dramatic cuts are made later this year.
That is not what Drummond wanted to hear.This is not a smorgasbord from which the government can choose only the tastiest morsels and ignore the less palatable, he said.We can all agree that change is disruptive, but the medicine does not go down more easily if it is dragged out over a long period.Although Drummond was not allowed to consider tax hikes, he said he cheated a bit and found $2 billion in enhanced revenues though higher fees and better collection of monies owed the province.But the lion’s share of the savings he identified came from cutting some of the Liberal government’s most treasured achievements, including:
• scrapping or revamping full-day kindergarten;
• raising the 20-student class-size cap in junior grades to 23 children and increasing the average in junior grades from 24.5 to 26 students and from 22 to 24 in secondary school;
• ending the Ontario clean air benefit, the 10 per cent rebate to electricity bills that costs the treasury $1 billion a year;
• cancelling the new 30 per cent Ontario tuition grant for college and university undergraduate students unless the overall post-secondary budget can be kept to a 1.5 per cent rise;
• extending the period municipal social service costs will be uploaded back to Queen’s Park by two years to 2020
• amalgamating some of Ontario’s 151 hospital corporations.
But Drummond urged against across-the-board cuts, wage freezes or targets for civil-service job reduction, though he implored the government to be creative.Do not hang on to public assets or public service delivery when better options exist. Consider privatizing assets and moving to the private delivery of services wherever feasible, he said.That does not mean a fire sale of assets.Do not partially or fully divest any or all of the province’s government enterprises – Ontario Lottery and Gaming Corporation, Liquor Control Board of Ontario, Ontario Power Generation and Hydro One – unless the net long-term benefit to Ontario is considerable and can be clearly demonstrated through comprehensive analysis.Still, he suggested the LCBO improve its purchasing power and open more stores to generate revenue.As well, the gambling agency should close one its two head offices — in Toronto or Sault Ste. Marie — as well as one of the two Niagara casinos and allow more slot machines to be installed beyond just at racetracks or existing gaming facilities.
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