This has been great week for policy wonks. In the past seven days we've seen the Drummond Commission report on the Ontario economy, as well as the B.C.
Budget for 2012/13.
Both documents offer a wake-up-call - although smarten-up would be the better term - and both paint a less-than-rosy picture of our economic future.
First to Ontario; or, how the mighty have fallen. Since Confederation, the interests of Ontario have had a huge impact on the Canadian economy.
From Sir John A. Macdonald's National Policy, proposed in 1876 and enacted in 1879, to the Crow Rate of 1897, our economic strategy was based on the notion that what was good for Ontario was good for Canada.
Fast forward to the economic reality of 2012 and that concept still prevails, and if it doesn't, it should.
However, in 2012, Ontario isn't the policy maker; rather it's the policy
messenger.
Simply put, our economic heavyweight and most populated province is leading Canada again, but this time it's down the slippery slope. As Globe and Mail columnist Margaret Wente so aptly wrote, "It's the rust belt of Confederation."
Knowing this - and in search of a bad-news-bear with credentials - the government of Ontario commissioned economist-extraordinaire Don Drummond to set the record straight and give the good folks of the province a lesson in economic reality.
By way of background, Drummond is a former Fed having served for 23 years with the Department of Finance.
Paul Martin - the best conservative finance minister the Liberals ever put in the portfolio - said, "Drummond was one of the most principled and imaginative public servants with whom I have ever worked". Drummond went on to become Chief Economist for
the TD Bank.
Drummond's report is subtle yet hard hitting. With a soft-sell introduction he says, "Ontario faces more severe economic and fiscal challenges than most Ontarians realize." Putting on his economist's hat he notes that unless the province changes its spending habits in five years it could have a debt to GDP ratio of 50 per cent, the same (gasp) as Quebec has now. That's scary in itself.
What's most interesting in the report is that Drummond really isn't saying anything new. For example, health costs take a large part of Drummond's report as health is the single largest spender of any provincial budget.
A number of recommendations are offered and in an e-mail chat I asked former Prince George family practitioner Galt Wilson what he thought of Drummond's take on health care.
Wilson, who is currently Deputy Registrar of the B.C. College of Physicians and Surgeons, said, "Drummond's health care service suggestions are
important, but not new."
Wilson went on to say much of what Drummond indentified was in the Senator Michael Kirby health care report of 2001. With apologies to Yogi Berra as well as Drummond and Wilson, what we have here is dj vu all over again and again and again, but have we learned anything? Not much, according to
Wilson.
How Ontario handles Drummond is up to the Liberal Government of Premier Dalton McGuinty. McGuinty has a minority government, is just into a new mandate and to date he's seems to be distancing himself from the obligations of the report. Ontarians, who seem to hold an entitled view of themselves as Canada's chosen and privileged people, would probably just as soon ignore the rude warnings of Drummond and continue to kick the spending can down the road.
I'm a bit cheerier about British Columbia's future. Finance Minister Kevin Falcon delivered his first budget Tuesday saying, "It's built on fiscal discipline."
He went on to say, "Investors are nervous. Consumers are cautious." And as we know from current polling, nervousness and caution are terms equably applicable to the Christy Clark government.
He also used the word paradigm twice in the first 30 seconds. It's a budget, Minister, not a term paper.
That aside, Falcon quickly got to the nitty gritty, told the civil service - one more time - there is no more money for salary increases, he squeezed most ministry budgets, held the line on the carbon tax, put some government-owned property on the block and rescinded a promised tax break for small business.
Given the aforementioned nervousness, and a 2013 B.C. election right around the corner, it was a gutsy budget.
As a political document, Falcon's
budget is what the Liberals have to do.
The party is down in popularity, it appears to lack direction and Premier Clark is not coming on as a strong leader. This budget draws a line in the sand.
No doubt Falcon's budget will have the provincial NDP as well as every free-spending cause in the province on its
indignant high horse.
Nevertheless, the lesson is simple and can be found in Adam Smith, Don Drummond and your bank statement.
To balance a budget, income has to equal spending. If one wants better results one must spend smarter, consider all the alternatives and be a better manager of a limited resource.
You can find that in Michael Kirby or in a chat with Galt Wilson. The answers are there and always have been.
Budgets and reports are easy; having the courage to implement meaningful change is the real test.
