austerity • mackaycartoons

Wednesday February 22, 2012

February 22, 2012 by Graeme MacKay

By Graeme MacKay, The Hamilton Spectator, Wednesday February 22, 2012

McGuinty steers into troubled, unnavigated waters

When the legislature opens for business on Tuesday, Dalton McGuinty will confront one of the most troubled periods in provincial history.

With a $16-billion deficit, a debt of about $250 billion, a sputtering economy, a weak job market and the danger of a credit rating downgrade, the 40th Provincial Parliament couldn’t be sitting at a more important time.

The challenges facing Ontario would be daunting for a majority government. Throw a minority government into that volatile mix, with the Drummond report hanging over his head, and McGuinty’s task becomes herculean.

Analysts say McGuinty’s situation is unique. What voters conjured up last Oct. 6 last year, is not the minority of 1985 when Liberals and New Democrats signed an accord and took power from Conservative Frank Miller, giving government to David Peterson. Nor is it 1975 and 1977 when Bill Davis led two Conservative minorities with relative ease in the face of a divided opposition.

The political environment today is more fractured and more partisan, with the Opposition Progressive Conservatives and the NDP united in their determination to give the Liberals no breathing room.

Worse still, worries about the economy have left cranky Ontarians in no mood to cut the government any slack. McGuinty not only has to walk a political tightrope in the legislature, he has to make sure whatever tough medicine he prescribes to revive the economy doesn’t lead to social unrest.

With 53 seats to the PC’s 37 and 17 for the NDP, McGuinty may have a “strong minority,” but it is not enough to give him control of his own destiny. (Source: Ottawa Citizen)

Tuesday February 14, 2012

February 14, 2012 by Graeme MacKay

By Graeme MacKay, The Hamilton Spectator, Tuesday February 14, 2012

How Ontario’s ‘stimulus’ spending led to disaster

The fiscal mess in Ontario is now common knowledge across the country, thanks in part to a sensational report from the Conference Board of Canada demonstrating that unless the government slashes spending and/or raises taxes, health care and education will have to be decimated. The report was no surprise to people who tracked Premier Dalton McGuinty’s march into Keynesian fiscal stimulus spending.

If we can’t expect politicians to take the blame for following the Keynesian deficit-spending policies advocated by their economic advisors, shouldn’t we turn to the economic experts to get them to explain themselves? The same people who supported and advised the McGuinty Liberals — and the Obama Democrats, the Greek and Portuguese politicians, the French and Canadian governments — to run up spending to rescue the economy will spend the next decade telling governments how to get out of the mess they helped create.

Ontario’s current circumstances create a perfect opportunity to confront the economic establishment and lay blame for the fiscal disaster that is Ontario. Government spending has been soaring for years. It all looks good if growth rates stay strong. Where were the dire economic warnings through the last decade that the expansion in government activity cannot continue without hitting a wall?

A table on Ontario’s spending habits (above) captures the disconnect between the government and the people. While the personal income of the people dragged at 26% growth, government spending soared more than 60%.

On Wednesday, former TD Bank economist Don Drummond will deliver a set of tax and spending options to the McGuinty government, a road map on how the province can resolve its fiscal problems. (Source: Financial Post)

Friday January 6, 2012

January 6, 2012 by Graeme MacKay

By Graeme MacKay, The Hamilton Spectator – Friday January 6, 2012

Austerity czar wants Ontario to spending

A government-commissioned review of Ontario’s public services is set to deliver a grim diagnosis of the province’s financial prospects, and propose a sweeping overhaul of the way it spends money.

At the heart of the new spending model would be a much tighter clampdown on health costs than Dalton McGuinty’s government has previously forecast. And among the roughly 400 recommendations for spending reforms are changes to some of the Premier’s signature education policies, including a shift away from mandated smaller classes.

The commission, headed by former bank economist Don Drummond, was appointed last spring to help find ways to accelerate the return to a balanced budget. But in an interview on Wednesday, Mr. Drummond made clear that it will be a struggle just to achieve the current target date of 2017-18, and acknowledged that implementing recommendations of the commission would require a significant degree of pain.

“If there’s a way of doing it without that, I haven’t been smart enough to find it,” Mr. Drummond said. “There’s pain in every single chapter.”

Mr. Drummond said the government has given the commission “almost shockingly” free rein, making no attempt to censor it. Nevertheless, the coming report – expected to be released within the next month – will present Mr. McGuinty’s Liberals with a major dilemma.

The Premier and his Finance Minister, Dwight Duncan, have held off on announcing any cost-cutting measures of their own, pending the commission’s findings. The report recently took on additional importance, with the threat of a credit downgrade by Moody’s Investors Services. (Source: Globe & Mail)

Friday November 4, 2011

November 4, 2011 by Graeme MacKay

By Graeme MacKay, The Hamilton Spectator – Friday November 4, 2011

Greek Debt Crisis at a Critical Point

In the European currency war, Germany has the biggest arsenal and the strongest interest in forestalling the collapse of the euro. So why is it playing Hamlet: “To lead or not to lead?”

September 2011

To ponder and waver is not the old German way. Today, Germany is about as aggressive as a pussy cat, but pundits and politicos from the U.S. to Greece have blamed its dithering for rising market volatility and the mounting costs of the debt crisis. The 50% haircut on Greek bonds decreed at last week’s EU summit should have been imposed a year ago. Athens was insolvent even then. So it is always too little, too late. Whenever the Berlin-backed European Union rescue brigades and the European Central Bank close one breach, the markets attack on another flank. They will do so again, and the euro will remain in peril. Greece simply cannot grow enough to service its debt.

As the euro burns, Mrs. Merkel fiddles mixed messages. In Berlin the chancellor preaches generosity, dispatching German taxpayers’ funds to Athens. But in Brussels she stalls, demanding ever-more austerity and market reforms before relenting at the last minute. The euro rises, then drops again.

Mrs. Merkel’s latest volley—that any Greek referendum on the terms of a rescue package by the EU and the International Monetary Fund would decide whether Greece keeps the euro at all—sent markets roiling this week.

Ontario’s Greek Crisis

Yet the unraveling of Euroland would hit Germany the hardest. The neue deutschemark would shoot up, while the nouveau franc and the nuova lira would nosedive. And so would Germany’s exports, now an astounding 47% of its gross domestic product, two-thirds of which stay within the EU.

So why isn’t Mrs. Merkel rushing forward to grab Europe’s crown? The answer, of course, is history. (Source: Wall Street Journal)

Tuesday May 24, 2011

May 24, 2011 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Tuesday May 24, 2011

Clement won’t rule out program cuts: reports

Treasury Board head Tony Clement said he would consider shutting entire programs and shrinking the public service to help produce a balanced budget by 2014-2015, according to reports.

Clement was named Treasury Board president on Wednesday, taking over from Stockwell Day, and is tasked with finding savings in other government departments to reduce the deficit, which is projected this year to be $29.6 billion.

On Wednesday, Clement acknowledged that a preferred option for saving money would be through attrition, or cutting public service jobs when people leave or retire.

But on Thursday, he elaborated, telling the Globe and Mail and Ottawa Citizen newspapers that cuts could mean entire programs are shuttered. Programs that might have been important 30 years ago may no longer be the best way to spend public money today, he said.

Patty Ducharme, the national executive vice-president for the Public Sector Alliance of Canada, the largest public sector union, said she was not surprised by the news. Ever since the government first talked about reducing staff through attrition, public service unions have said such a plan was not possible or practical.

“I’m dismayed though, given the fact that what this government has been saying leading up to the election was that there would be job reductions, but those reductions would come through attrition and nothing more than attrition,” Ducharme said.

“One day into the job and now he’s telling the truth. Thanks Tony.”

Ducharme said she was at a loss as to which government programs might be targeted. (Source: CBC News)