Harris Tories One Year Later
On any day in the roller-coaster life of Ontario's Tory government, there is a dizzying list of deeds. Within scant hours last week, as Toronto councillors lugged 11,600 postcards opposing the policy to the legislature at Queen's Park, the government confirmed its resolve to modify rent controls. It appointed a group to overhaul the property tax system. Then, it tabled "business plans" for every ministry, including proposals to revamp the so-called "broken" education system and to study privatization of the liquor board. For many voters, the pace is so fast that it evokes nostalgia for former Tory premier William Davis, who governed for 14 years, until 1985, with the only-half-in-jest motto that "Bland works." "Premier Davis taught me that Progressive Conservatives never put off until tomorrow what they can put off indefinitely," quipped former aide Hugh Segal. "But during relatively booming times, he had the luxury of doing things gradually. On today's fiscal issues, there is not the same luxury. It is a different time."
Such understatement would flabbergast many Ontario voters. As Premier Mike Harris prepares to celebrate the first anniversary of his landslide election victory on June 8, he can say with certainty that times are very, very different in his once-staid province. Since he ousted NDP Premier Bob Rae, Harris has undertaken the most radical alteration of the 1990s in the shape of traditional, post-war Canadian governments. His efforts to lop off programs, to shrink government's very presence, have already become the centrepiece in a divisive, cross-Canada debate over how much anyone can expect in straitened times. And his all-out drive to sharpen Ontario's competitive edge has put pressure on his fellow premiers and Ottawa to lower taxes, define their essential mission and curb regulations. Indeed, as he assumes Alberta Premier Ralph Klein's mantle as the poster pinup of radical-right populists, Harris has, in fact, changed the very concept of what government does.
In the name of his Common Sense Revolution, he has proposed $8 billion in spending cuts, digging deeply into transfers to hospitals, school boards and municipalities and cutting 10,600 civil servants from the government payroll. He has pared social assistance payments by one-fifth, and promised work-for-welfare this fall. Although the province's deficit was barrelling towards $10.6 billion when he took office, he has promised to balance the budget in the 2000-2001 fiscal year. And last month, to the stunned relief of taxpayers, he cut the provincial income tax rate by 30 per cent over three years. "Government's role is not to see how many people we can employ," Harris told Maclean's last week, "it is to deliver the services that the public wants government to deliver with the best quality and the best price. [What is most important] is that change in attitude".
Such change has come so fast and so implacably, however, that it has even disconcerted many government supporters. Pollsters are divided on the depth of that effect: two months ago, Angus Reid Group put the Tories in first place with 51 per cent of decided voters - while Environics Research Group Ltd. placed them five percentage points behind the opposition Liberals, who have not yet chosen a new leader. Both companies agree that most Ontarians approve of the Conservatives' desire to cut the deficit, streamline government and promote economic growth. But both detect mounting anxiety that the cuts have now hit the bone, affecting the quality of valued services such as health and education. Many Ontarians wonder whether it is possible to make enormous cuts in a $54-billion budget without equally enormous mistakes. Controversy rages over everything from hospital closures to the end of junior kindergarten. On many issues, the province is polarizing between rich and poor, men and women, old and young, business and labor. "He has done substantive and profound damage to the social safety net," argues Lynne Toupin, executive director of the National Anti-Poverty Organization. Counters former Tory campaign chairman Tom Long: "Average people have made adjustments in their own lives. The only major player who had not caught on to the fact that the world had changed was government."
Such debates may be familiar fare in most provinces, where austerity has become a way of life. But they are shockingly new and far more brutal in Canada's wealthiest and most populous province. And they carry profound implications for the very structure of the postwar nation: that is, as Ontario cuts its own spending it is also taking dead aim at those lavish federal-provincial programs that transfer its tax dollars to poorer provinces. Because Ontario waited so long to tackle its $103-billion debt, it must now devote almost one-fifth of its revenues to interest payments. To attract new investment to pay those bills, the Ontario Tories are taking an unusually hard-nosed approach to their economic competitors, including the other provinces. Harris says that when Ontario removed its sales tax from 1-800 telephone numbers last month, it was a "little shot over the bow" of premiers such as New Brunswick's Frank McKenna, who have used such measures to attract business. At the First Ministers' meeting set for June 20-21, Harris will warn that the days of ever-increasing transfers from rich provinces to poorer provinces are over. He will demand that Ottawa spend Ontario's $4-billion annual surplus in Employment Insurance premiums on local training - or cut the premiums. "We are no longer the fat-cat Ontario that you can raid and take our jobs," he warns.
The 51-year-old premier delivers such announcements with the low-key affability of a small-city politician - which, with his roots in the resource centre of North Bay, is exactly what he was. But it is impossible to miss the steely resolve behind the smile. After 12 months of near-constant attacks, impassioned threats and plaintive pleas, he is changing the style, but not an iota of the content, of his approach. Maclean's has learned that he will shuffle his cabinet this summer, replacing fledgling ministers with skilled veterans in such senior portfolios as health and education. He will promote bureaucrats who are not afraid to tell ministers when they are wrong. Then, he will direct those ministers and bureaucrats to reach out to groups such as school boards that are affected by the cuts. Senior Tories reason that those groups now understand that protests will not stop change. As a result, after 12 months of often-unstinting resistance, they might now work with the government to ensure that spending cuts are as painless and effective as possible. "In the end, it will be good that you kept your promises," says one Conservative insider. "But it will also be important that you discharged your mandate without undue division and fragmentation in the province. When you make cuts, you shouldn't look like you are enjoying it."
The Rev. Jane Howe worked at a small neighborhood centre in a low-income area of North Bay until December, when provincial funding stopped. Overnight, she lost her job. And the community lost a haven that ran parenting and child programs and guided frazzled, frightened people through the system. Howe remembers clients like the ill, elderly man who could not get to his doctor and the mentally disabled woman who did not understand how to prepare healthy meals for her children. People like that may still find help, she says, but it will be rushed and probably inadequate because fewer workers are carrying greater caseloads. Howe has found part-time work at a local United Church - but she cannot find a full-time job. She recounts the tale of a friend who is a skilled child-care worker and who is now cleaning yards. Last month, when that friend was sweeping the parking lot at the correctional services ministry, some of her former colleagues strolled past - to her intense embarrassment. "It just stayed with me that here is this incredible woman whose talents are being wasted," says Howe. "People feel very isolated, very powerless. It feels useless to protest. It feels useless to talk about the impact. It is rough."
The economic jolt has been tough in once-staid Ontario. The former powerhouse of Confederation ran deficits, almost consistently, throughout the 1980s and 1990s in the forlorn hope that the economy would eventually grow faster than the debt. The NDP alone ran up more than $45 billion in unpaid bills during its five-year tenure. When Finance Minister Ernie Eves took over last summer, he went on the small-town luncheon circuit with a message that never failed to draw gasps from his audience: the province was spending $1 million more every hour than it collected. There had been 65 separate tax increases, including 11 hikes to personal income tax, since 1985. While every other province, with the exception of Quebec, had tackled its fiscal problems, Ontario was now paying almost $9 billion every year in interest costs - the same amount it was spending on every level of education. And those interest charges were rising inexorably.
That message struck a chord with taxpayers. Pollsters have noted a profound evolution in the values of Ontarians during the 1990s: there is less reliance on government, coupled with more self-reliance. When voters look at governments, they now apply what pollsters refer to as Everyday Life Economics as their test: that is, they expect governments to behave like themselves, saving in hard times and spending in good times. As a result, as Eves set out to cut the deficit, he had the majority of voters behind him. "People are becoming more confident in themselves, saying that they think maybe the role of government should be reduced in their lives," says Environics vice-president Jane Armstrong. "In tough economic times, this sense of need to take individual responsibility has turned into a survivalist attitude: the notion that it is a jungle out there and everybody needs to be tough."
But then the changes appeared to go too far, too fast. When people like Howe talk, haltingly, about how hard it is "to find any sense of hope," they now evoke an uneasy disquiet that is shared among many voters. According to Environics, half the population now believes that the cuts are too deep - and they fear for the quality of their life. "It looks like a fiscal hammer," says economist Judith Maxwell, president of Canadian Policy Research Networks Inc., which probes the social dimensions of economic change. "It is very difficult to get a sense of where they would draw the line with respect to compassion or investment in future generations."
Patricia Gardner, 31, has been on welfare, off and on, for almost six years, ever since her daughter Cleo celebrated her first birthday. Since late 1994, she has worked sporadically at a part-time job in an auto parts plant on the outskirts of Cobourg, a picture-perfect community on the shore of Lake Ontario, 115 km east of Toronto. Two months ago, Gardner launched a union grievance, arguing that she was eligible for a full-time job. Since then, the firm has stopped asking her to work its 3-to-11:30 p.m. shift. Now, she worries how she will cover expenses and her $610 monthly rent with her $957 welfare cheque. What happens if she loses her grievance? What happens if she ends up in a work-for-welfare program? "You get this little bit of money which isn't enough to begin with and then you are forced into some job which will probably be demeaning," she says. "I feel like my life is on a knife edge. The Tories blame the poor because they are poor. They don't show very much sympathy."
Such sentiments have splintered the province, cracking its social peace. While most Ontarians support the concept of workfare, they are deeply divided over the government's overall performance, especially its approach to social programs. In an April poll, Environics noted that government support is strongest among men, those who earn more than $60,000 per year and those who are 55 and older. Poorer people, younger people and women tend to favor the opposition Liberals. The splits were obvious when labor leaders staged massive protests last winter, including a day-long strike in London and a two-day rally of 100,000 workers in Hamilton. Another protest is slated for Toronto in October.
Such divisions have ensured that many Ontarians are uneasy, almost guilty, about their tax cut. When it is implemented in 1999, the provincial tax rate will be 40.5 per cent of basic federal tax - the lowest in Canada. "Who wouldn't like to have a tax cut?" muses Toronto landscape architect Sheila Murray. "But what really concerns me is knowing that my tax has been cut at great expense to those who can't afford it."
Harris took a deliberate gamble when he appointed rookies to senior cabinet posts and then sent them out to change the world - fast. The results were decidedly mixed. As he calculated, the rookies had no political base, so they did not become bogged down in endless debates. They dismantled employment equity legislation that imposed hiring targets for women and minorities on private firms. They repealed labor laws that banned the use of replacement workers in strikes. They cut with little apparent compunction.
But they also lacked the skills to evaluate advice - and to steer controversial legislation with minimum disruption through the legislature. Social Services Minister David Tsubouchi advised welfare recipients to purchase dented tins of tuna. Education Minister John Snobelen told his bureaucrats to invent a crisis - so that he could make changes under the guise of solving it. In what Harris considers his biggest mistake, the government pushed through omnibus legislation that made massive changes in the health-care system and the operation of cities. Instead, he told Maclean's that the bill should have been split into smaller pieces, and pushed with less haste. "It should have been better managed and better understood," he said.
Such mistakes may fade from public memory - if the economy flourishes and employment grows. The premier has focused his attention on an all-out effort to attract new investment. And although he has just formed a cabinet committee on national unity, his meeting last week with Quebec Premier Lucien Bouchard was devoted to economic concerns such as their mutual quest to force Ottawa to cut EI premiums.
Such an avidly pro-business attitude has its dangers. There are times when it seems that the Ontario Tories assume that all companies have the good intentions of small-town, mom-and-pop corner stores. Last month, Consumer Relations Minister Norman Sterling abruptly allowed travel and real estate agents, car dealers and cemetery operators to administer government-set regulations. As the Consumers Association of Canada warned, that course can be risky: self-regulating groups eventually set with high prices and stiff barriers to the entry of competitors. Said its regulatory spokesman, Robert Kerton: "It is impossible for the best-intentioned fox to have the point of view of a chicken."
Still, there are signs that business likes what it sees. Catherine Swift, president of the Canadian Federation of Independent Business, recalls the blank stares she used to get when she talked to members of the former NDP government. "Their reality was a Big Union reality: they understood a General Motors workplace but they sure didn't understand a four-person workplace," she says. In contrast, the Harris government is scaling back employer payroll taxes for health care. "There is no question that this is a more welcoming climate for business," she says. "That boosts confidence - and that translates into hiring and expanding."
Perhaps no policy has triggered tougher, more conflicting opinions than the tax cut. Carl Sonnen, president of the economic forecasting firm Informetrica Ltd., says the government is taking $2 billion more out of the economy through restraint than it is adding through tax cuts. "Restraint slows the economy down," he says. "I am not going to give much credit to this 'investor confidence' thing." In contrast, government economist Peter Spiro maintains that previous Ontario tax increases killed twice the number of jobs that standard economic models predicted. "Consequently they are likely to understate the positive effects of an income tax cut," he wrote in a recent issue of the Canadian Tax Journal. Harris himself has no doubts: "Economists can't punch in a 'confidence factor' into their computer. Yet most business decisions, even large ones, are ultimately made right here." And he points to the pit of his stomach.
Matthew Kinsella, 28, works seven days a week, from 6 a.m. until nightfall, buying old Toronto houses, restoring and then reselling them. It is a tough job, combining hard physical labor with nail-biting financial risk. A sudden turn of interest rates, a miscalculation in a plumbing bill, and his profits could evaporate. But Kinsella says that if he doesn't work hard and take chances, there will be no future for himself and his wife, Karen. "I don't think there is going to be any retirement plan by the time I reach 60," he says. "I hear the left yelling and screaming about work-for-welfare. Well, I work every day - and I don't get anything for free. I just have a feeling that there are a lot of people who are my age, who work pretty hard for a living and who don't get to take home a lot of it and who are getting tired of hearing the left yell and scream about cuts."
The battle over social spending cuts has been corrosive - and it runs far deeper than debates over the loss of specific programs. Pollster John Wright, senior vice-president of the Angus Reid Group in Toronto, says many Ontarians base their very concept of Canada on the continued existence of a strong network of social programs. But as the millennium approaches, as Kinsella so bitterly notes, there is a new reality: social programs such as old-age pensions are shrinking because there is not enough money to pay for them. An identity crisis is clearly on the horizon. "Harris is caught in this question: what is the role and responsibility of institutions in our society?" says Wright. "People are faced with a whole series of trade-offs: tough decisions like health care versus day care. What people are really looking for is employment stability and income. Harris has to lay out a platform on how we work with these new realities, how we define the new value systems and the new identity, and what are our expectations for the future."
That is a tall order: define the role of government in 21st-century Ontario. To succeed, the Harris government must proceed with greater care, tugging its partners like cities and school boards into the unsettling process of reshaping their roles. If he can rebuild the social peace, if he can diminish the jarring sense that too much is changing too fast and if the economy stays strong, his government could reap the rewards at the polls. "Our goal is to increase the wealth of the average Ontario family," Harris says. As he moves into his second year, he must now figure out how to minimize the pain and emphasize the pleasures of that quest.
Maclean's June 10, 1996