Ontario Cuts Back
Inside the former supermarket warehouse that houses the Daily Bread Food Bank on Toronto's Lakeshore Boulevard, assistant executive director Sue Cox stared in grim disbelief at the people trickling by her office for welfare counselling. "I know there's a financial crisis," she said. "But this is not the kind of people who should be suffering. It just doesn't seem fair." Cox's lament was echoed by many other Ontarians as Premier Mike Harris's "Common Sense Revolution" began to take tangible form last week. Harris's first budgetary announcement cut a swath through the provincial ledgers and lopped nearly $2 billion off this year's projected spending - more than a quarter of that from the welfare cheques of the poor.
Across town, the money markets and Bay Street hailed Harris's determination to live up to his campaign vows to cut government down to size. The economic manifesto marked his first step towards moving the province sharply to the right since his election on June 8. Harris's cost-slashing plan also froze grants to business, cancelled $200 million in planned subway and road-building schemes, eliminated an employment-creation program known as JobsOntario and promised to cut an estimated $32 million in payments to provincial boards of education next year. Said Ted Carmichael, senior economist for J. P. Morgan Canada: "It is clear from the initial statement that there will be no sacred cows."
But to many analysts, it also seemed clear that the cuts did not affect middle- and upper-income Ontarians as deeply as they did the poor. Indeed, in a gesture that appeared aimed at sending a signal to his conservative supporters, Harris's axe fell hardest on those on the welfare rolls - an estimated 1.3 million people. For a single man or woman on social assistance, the 21.6-per-cent cut in welfare payments - which the government estimated will save $469 million this year - will mean a monthly cheque reduced from $663 to $520 as of Oct. 1. Eves argued that, even after that move, Ontario's social assistance rates will remain 10 per cent above the average welfare levels in other provinces.
But one result of the cutbacks, Cox predicted, will be to double the current demand for food bank handouts. As social welfare groups assembled in Ottawa for an emergency session to discuss their response last weekend, Lynne Toupin, executive director of the National Anti-Poverty Organization, declared that the first phase of Harris's revolution was "nothing short of disastrous for poor people in Ontario." Agreed former NDP minister Marilyn Churley: "The war on the deficit is being fought on the backs of the disadvantaged."
Harris justified the cuts - which exceeded forecasts that his officials had previously provided to the media - by declaring that the New Democratic government of Bob Rae had "actually left Ontarians facing a deficit larger than last year's." Then, pronouncing the province's fiscal situation "critical," the premier left his best friend and finance minister, Ernie Eves, the Parry Sound MPP who has emerged as Ontario's second most powerful elected official, to spell out that crisis. While Eves announced that the Tories had inherited a $10.6-billion deficit - $2.7 billion higher than that forecast last spring by the NDP government - he resisted reporters' attempts to lure him into an outright denunciation of Rae's regime. "I wouldn't say the NDP cooked the books," he hedged. "Perhaps their financial prognostications were not as rosy as they anticipated." But even after last week's cuts, he predicted a deficit for 1995-1996 of $8.7 billion.
NDP spokesmen attacked the Tories' figures as nonsense, and Liberal Leader Lyn McLeod scoffed at Harris's attempt to use a suddenly discovered crisis as justification for his cutback spree. "Anybody who has been around Queen's Park the last few years knew how bad the financial situation would be," she said. "If it is an unprecedented crisis, call the legislature back and let a debate take place." McLeod charged that Harris needed the excuse of a fiscal emergency to pave the way for even greater cuts to come in an economic statement in the fall in order to make good on his most controversial election promise: a 30-per-cent cut in individual and corporate tax rates. "This is just the beginning of the people of this province starting to pay the price for an irresponsible commitment," she said. "And that price is going to be paid by the most vulnerable."
Even the bond raters whom Harris seemed determined to reassure shrugged off his declaration of emergency as routine. "It's not a surprise," said Jeff Moore, senior financial analyst with Dominion Bond Rating Service Ltd. "Basically what happens when a new government comes into power is they revise the deficit figures upward."
Moore said the Tories' sweeping cuts had sent a signal to agencies such as his, which calculate Ontario's borrowing power, "that they're serious about deficit reduction." But he also cautioned that those measures would do little to boost the province's credit rating for at least another year - and a further round of cuts. "It's a nice start," he said, "but this is the easy stuff. It's like trading down from a Rolls-Royce to a Jaguar. It's when you have to trade down to a Volkswagen Jetta that it hurts. One cut is not enough."
Other critics insisted that while Harris was keeping his campaign vow to cut spending, he had already broken a more serious commitment - to leave provincial health-care funding untouched. Eves defended the $111 million in cutbacks projected for the ministry of health as "administration efficiencies" that could be implemented without affecting patient care. But McLeod attacked that move as a breach of faith. "Mike Harris has broken his first and most important promise," she said. "Any other commitment is meaningless."
Confirming a measure that Harris had announced two days earlier, Eves also tightened the financial screws on Rae's controversial employment equity law, which came into effect last Sept. 1 to promote the hiring of women, racial minorities, aboriginals and the disabled. But capping expenditures for a program that the premier has vowed to kill by year's end produced a saving of only $8 million, convincing many critics that the gesture was largely designed to appease the business community, which had vociferously opposed the initiative. Indeed, for former NDP minister Churley, who had administered the program, the guest list for Harris's announcement made the new government's priorities clear. As the premier and Eves read their statements to reporters and other invited guests in a legislative meeting room, Churley found herself outside banging on the door, barred from entry by Ontario Provincial Police officers. "I'm an elected representative and I was told I couldn't come in," she fumed later. "Then, I found out the president of the Board of Trade was allowed in as an invited guest. Draw your own conclusions as to whose benefit this is for."
But while Bay Street and the bond raters anticipated Harris's next round of budget cuts this fall, anti-poverty activists such as Lynne Toupin shuddered at that prospect. "It's not going to be the society we even have in Ontario today," she predicted. "It's going to get pretty ugly." On that score at least, even Ernie Eves seemed to agree. As he admitted with a rueful smile: "I can't stand here and say the fall economic statement will be any easier."
Maclean's July 31, 1995