Drummond recommends boosting class sizes, utility bills & GO parking fees
Posted February 15, 2012 2:11 pm.
This article is more than 5 years old.
Higher utility bills, increased public-school class sizes and new parking fees at GO Transit lots were put into play Thursday in a sweeping report by economist Don Drummond aimed at ridding Ontario’s massive deficit.
The so-called Drummond report has outlined 362 recommendations across all public services including health care and education to help the Ontario government eliminate its $16-billion deficit.
Finance minister Dwight Duncan said the government will look at all the recommendations, and that it will need the support of at least one of the Opposition parties to pass the 2012 budget. (To view the entire report, click here.)
The Commission on the Reform of Ontario’s Public Services, headed by the former TD Bank economist is recommending the government cap spending at 0.8 per cent or $6.3 billion a year until 2017-18.
Specifically, the report recommends spending cuts of 2.4 per cent or $4 billion a year for all other programs other than health care, education, post-secondary education and social programs.
“We really are trying our best to approach this not as a simple-minded fiscal exercise because we’ve seen the results of that before,” Drummond said.
“We made 360 recommendations to do that. Hopefully they’ll be accepted. But if not, something else needs to be replaced to get that simultaneous outcome of the best public services at a price Ontarians can afford.”
If the government doesn’t make any spending changes, the $16-billion deficit would grow to about $30.2 billion by 2017-18 and the net public debt would reach $411.4 billion.
The finance minister said that there are other things that Drummond wasn’t required to consider, such as increasing taxes and divesting assets as well as Opposition ideas of freezing corporate taxes at 11.5 per cent, which the government will examine.
“As a government we have to look at that. That’s fair,” Duncan said.
Opposition Leader Tim Hudak said he would like the government “to throw a quarantine zone around the public purse,” and that it act on some of his ideas, including bringing in public sector wage freezes and getting out of the so-called “corporate welfare business.”
“We’re running out of money and we’re rapidly running out of time,” Hudak said. “It’s time for action. No more delays. No more dithering. Let’s get to work.”
Duncan said that the one thing that concerns him is interest rates.
“Our deficit leaves us vulnerable,” he said, adding that a one percentage point increase in interest rates translates to $500 million a year and would accrue to as much as $3.5 billion over four years. The government will spend $9 billion in interest payments this year.
“That continues to go up even if rates stay down,” he said. “That’s our challenge and that hinders our ability to deliver public services we want to deliver.”
On health care
The commission recommends reforming the health care system to make it operate more efficiently and asks the government to develop a 20-year plan, one that shifts the focus from acute care to chronic care. It suggested capping health care spending at 2.5 per cent or $8.4 billion a year until 2017-18.
Health care is the government’s single biggest spending program. In 2010-11, Ontario spent $44.8 billion, which is 40.3 per cent of its overall spending on programs, and the cost of health care continues to rise.
Ontario should band together with the other provinces and federal government to buy drugs, tie public drug plan benefits to income and allow nurses, physician assistants and pharmacists to provide more services where possible.
Other recommendations among the 105 suggestions for health care include:
– all patients not requiring acute care should be diverted from hospitals to more appropriate care (including extensive use of home-based care).
– integrate all health services in a region including primary care physicians, acute care hospitals, long-term care and community care access centres.
– hospitals should be encouraged to specialize.
– physicians should be paid through a blend of salary and fee-for service of 70 per cent and 30 per cent, respectively.
– do more in the area of disease prevention and health promotion and should consider uploading public health to the provincial level.
– government should have greater control over pharmaceuticals; pursue setting a common price for pharmaceuticals.
– allow both public and private sectors to play a role in delivery of services.
– extensive use of IT (information technology) across the system to allow integration of different activities.
On education
On elementary and secondary education, the commission recommends the government cap spending at one per cent or $1.6 billion a year.
Some of the 27 recommendations for elementary and secondary education include capping primary grade class sizes at 23 from 20 (to save $90 million), at 26 from 24.5 for Grade 4-8 (to save $140 million) and 24 from 22 for Grade 9-12. It also strongly recommends pressuring the federal government to provide funding for First Nations on-reserve education.
The commission recommends cancelling the full-day kindergarten program but the finance minister has already said earlier this week that it won’t do that.
The report added that if the government continues the implementation of the full-day kindergarten program that it should delay full implementation to 2017-18 from 2014-15. It should also reduce program costs to have one teacher for about every 20 students, which would save about $200 million in salary expenditures.
Ontario could save $120 million with a 25 per cent reduction in classroom supplies such as textbooks.
On post-secondary education, the report recommends spending 1.5 per cent or $700 million a year until 2017-18.
The province could save $70 million by eliminating the so-called victory lap program that allows students to take additional years of secondary education.
Some of the 30 recommendations include reshaping student financial assistance, including the newly announced 30 per cent Off Ontario Tuition grant to target more low-income students as well as phasing out provincial tuition and education tax credits to invest in upfront grants.
On transit
The report recommends reviewing the roles and operations of public and private mass transit service providers in the GTA and the Hamilton area.
It also suggests that GO Transit begin charging for parking in its lots, like the TTC did recently.
On utilities
Drummond recommends increasing water rates homeowners pay to recover the full cost of water and wastewater services. What’s more, the report recommends eliminating the Ontario Clean Energy Benefit “as quickly as possible.” The energy benefit is the province’s largest rate subsidy.
On social programs
The commission recommends spending on social programs, such as Social Assistance, Child Welfare and the Ontario Child Benefit, be capped at 0.5 per cent or $0.5 billion a year until 2017-18.
The government should move towards a fully integrated benefits system that simplifies client access, centralizes income testing and payment delivery and automates the application process.
“Containing growth to 0.5 per cent annually would mean reducing total social assistance spending by over $2 billion per year by 2017-18 relative to what it would have been,” the report said.
Furthermore, the report said further reforms may be required.
Other programs
The commission is reporting that the government lower annual spending for all other public services such as employment and training services, immigration and infrastructure by 2.4 per cent until 2017-18.
The province should also close one of two Niagara casinos, have the Liquor Control Board of Ontario do more with its buying power, sunset direct subsidies for business and lower the high prices offered through the province’s feed-in-tariff programs for solar and wind projects.
Workers in the broader public sector will also have to do their part to reduce the deficit, Drummond said.
Ontario should force teachers to retire later and pay more for their benefits. It should also try to reduce pension contributions, since it matches what the teachers pay in. And it should cut 9,700 non-teaching jobs such as education assistants, guidance counsellors and vice principals, to save $600 million.
Government workers and doctors should have their wages frozen, and doctors shifted to a pay model where fees for service account for only 30 per cent of their compensation.
The Drummond Commission was established last spring by the McGuinty government to help the government balance its budget by 2017-18 without privatizing health care and education nor increasing taxes.
With files from The Canadian Press
