The pressure is on for Ontario to produce a plan to tackle its unprecedented $24.7-billion deficit, but Premier Dalton McGuinty said Friday he wouldn’t rush into anything.
Given that the historic shortfall number is only a prediction, McGuinty also wouldn’t rule out the possibility that the actual deficit figure will end up being even higher.
“You rely on the best estimates that are available out there,” the premier said. “And $24.7 billion is the best estimate that we have at this point in time.”
Just 12 months ago the government predicted a $500-million deficit for 2008-09 – a number that ultimately grew to $6.4 billion. The original deficit projection for 2009-10, made in the March budget, was $14.1 billion.
The government is putting the blame on dramatically reduced tax revenues and increased program spending in the face of the recession. While it’s warning of belt-tightening ahead, details of what programs will feel the pinch won’t be released until next spring’s budget.
The opposition and certain public sector groups don’t want to wait that long, instead demanding that the government outline which programs or services will be scaled back or cut.
McGuinty refused to bow to those demands Friday.
“I’m very mindful, in the face of these kinds of challenges, of the old maxim that says: ‘Don’t just do something – stand there, think, and then do something,”‘ McGuinty said after a speech to the Belleville Rotary Club.
“You’ll get the best advice from economists, including people like (TD Bank’s) Don Drummond, who said: ‘Be careful about being reckless, be careful about responding in some way that you will later regret.'”
Ontario residents are just coming to grips with the size of the deficit, McGuinty added.
“They have in overwhelming numbers just learned about the size of the challenge. It’s just been brought home to them that the recession has not just affected the economy, it’s affected their government’s finances,” he said.
“Now, together, we’re going to find a way forward.”
Opposition parties fear that programs and services might be cut as the government tackles the enormous deficit, and blasted the premier for failing to present a plan.
“My God, he has known for more than two years about this economic downturn; he has known that Ontario is facing worse and worse times,” said NDP critic Michael Prue.
“He keeps trying to gloss over it. He has to have a plan.”
McGuinty, he said, should be looking at his own spending and cut off this government’s use of consultants immediately.
Opposition Leader Tim Hudak said Ontario’s deficit was more than all the other provinces combined and showed McGuinty needs to break his addiction to consultants and wild spending.
“How Dalton McGuinty and (Finance Minister) Dwight Duncan could come with a straight face, announce a $25-billion deficit, and no plan whatsoever to get us out of this mess is an absolutely failure in leadership,” Hudak said.
“There’s not a frugal bone in this guy’s body. There’s no doubt that Dalton McGuinty is hard-wired to increase your taxes and increase spending.”
The economic statement included a $4.8-billion spending increase to support skills training, health care and other services, but there have already been cuts to programs like the Self Employment Benefit, which helps entrepreneurs.
McGuinty has also warned hospitals and the Children’s Aid Society to expect to have to do more with less. A report Friday said the government secretly hired cost-cutting consultants to go over the public drug plan for seniors and welfare recipients.
The report said the contract was so under wraps that Ministry of Health officials initially denied its existence, and then refused to release the consultants’ recommendations or the cost of the contract.
Health Minister Deb Matthews responded Friday by saying the contract with McKinsey Consulting wasn’t just about reducing coverage for seniors or people on social assistance, but part of the Transparent Drug System for Patients Act – a program that aims to increase the number of drugs covered and getting a better price for them.
“McKinsey was hired on a $750,000 contract to help develop aspects of the implementation of that new drug system,” Matthews said in a statement.
Duncan has blamed the deficit on a 48.1 per cent drop in corporate tax revenues – which amounted to a $5.8-billion loss in provincial revenue.
Ontario is now projecting ongoing deficits of $21.1 billion in 2010-11 and $19.4 billion the following year.