Monthly Archives: April 2011

The announcement was barely out of the mouth of Finance Minister Dwight Duncan before his new Commission Chairman contradicted his promise.

Don Drummond, former TD bank Chief Economist, was appointed earlier this week as Chair of a Commission on the Reform of Ontario’s Public Services.

During his budget speech, Duncan made it clear the Commission had two restrictions – they will not make recommendations that would increase taxes or lead to the privatization of health care or education.

The very same day everyone understood Drummond to take issue with those restrictions, stating bluntly that he would consider “almost anything” to fix the province’s finances, including health care and education.

Drummond got the attention of the media last year when he suggested that if left unchecked, health care would take up 80 cents of every dollar spent on provincial programs within 20 years. Of course, he ignored the fact that in recent budgets health care spending had remained about the same percentage of provincial spending, and within the last two years, had actually declined. This year the provincial budget suggests health care will take up 42 cents of program spending, down from last year’s 45 cents.

Drummond also ignores the his own admission that costs are connected to the funding restraint of the 1990s.

There is no question that Drummond has more privatization in mind, albeit privatization within the context of public delivery.

In a recent Toronto Star opinion piece, Drummond made his prediction of where health care would go: “It will likely still have the cherished single public payer feature, and indeed that might be extended to some areas like drugs and longer-term care that are now largely in the private domain. But the delivery of services within that public payer model will likely have a larger private sector presence.”

While Duncan speaks about taking privatization off the table for health care and education, it is clearly on the table for everything else. “Just because a government department is delivering a program or service today does not mean it should deliver that program or service in the future,” the budget documents state.

In health care Drummond has also taken on the idea of universality, advocating that wealthier seniors be kicked out of the Ontario Drug Benefit. By applying a means-test to government drug programs for seniors, he opens the door to similar plans for other health services. With no stake in such programs, it gives an incentive to wealthy Canadians to advocate for further financial restraint of a system they won’t be using.

The folly of Drummond’s idea about making certain Canadians pay more is this — by transferring the burden of health care to the individual, you don’t really save money, you just change who pays for it. As we have seen in the US model, greater privatization leads to much higher overall costs.

Drummond is no stranger to government. He also served as a senior official at the Federal Department of Finance. He is considered to be the architect of the corporate tax cuts begun by the Chretien/Martin government and continued by the Harper government.

In the first decade of the new millennium, the Federal government reduced the corporate tax rate from 29.12 per cent to 22.12 per cent. This was at a time when the economy was booming and companies were realizing double-digit growth. And yet the boom in private sector investment that was supposed to emerge never happened. From 2001 to 2010 investment averaged a mere 3.1 per cent.

“I hate to admit this, but I don’t think much of the growth of the past decade could be attributed to lower corporate tax rate,” he recently told the National Post. Yet Drummond continues to maintain it was the right move despite the huge impact it has had on public sector revenues. He just has no evidence to support it.

When the finance minister appointed Drummond to take on this role, he didn’t inherit someone who would study the situation and come to thoughtful conclusions based on the evidence, he hired someone with a clear track record of advocating privatization and lower corporate tax cuts.

Drummond’s advocacy should have immediately discounted him for this job. We all know where this is going and have every right to ask whether alternative ideas will get a fair hearing?

Can we really afford another Don Drummond mea culpa in a decade from now?

The end of March might as well as be called bash the public service day.

It’s the day the sunshine list (a list of all public sector workers earning more than $100,000) comes out and right-wing think tanks, politicians and newspapers tell us how out of control public sector spending on wages is.

This year the headline is about a jump of 11 per cent in the numbers on the sunshine list –  a number completely meaningless given the sunshine list is never adjusted for inflation.

If it were adjusted for inflation, we would be seeking the list of those who earn more than $134,000 per year, not $100,000. That would wipe out about three-quarters of the names on it. 

About 1.2 million people are employed in the public sector. There are 71,478 on the sunshine list. If the sunshine list were adjusted for inflation, that number would be reduced to less than 18,000. That is 1.5 per cent.

The sunshine list also distorts reality – that for most of us, our wages have remained relatively stagnant while the province’s elite continue to reap an ever higher percentage of economic growth. Finance Minister Dwight Duncan reported the average public sector wage went up by 1.8 per cent last year. That’s hardly the road to the high life.

Over the past 30 years Canada’s real economic output has more than doubled. Last year the Canadian Centre for Policy Alternatives released a report indicating the richest one per cent grabbed one third of all income growth since 1987. Their average income was $405,000.

The top .01 per cent saw the highest increases to their annual income, from an average of $640,000 in 1982 to $3.8 million in 2007. You won’t find any Ontario public sector workers in that category.

In the legislature the Tories were predictably on the attack. Tory MPP Christine Elliott called the McGuinty government’s spending restraint a “PR scheme.” There is no question that the Tories are looking for much tougher wage restraint in the public sector.

Earlier in the week, R. Michael Warren wrote a lengthy opinion piece in the Toronto Star claiming “over the last two decades public sector unions have used our growing dependence on their services to drive their members’ compensation to questionable heights.” Warren, who calls himself a “corporate director and public affairs commentator,” quotes a questionable study put out by the Canadian Federation of Independent Business (CFIB) that suggests public sector employees “enjoy” a compensation premium of 14.8 per cent.

To the extent that there is a wage premium in the public sector, it’s caused by two things the CFIB doesn’t ever mention: unionization and pay equity. The public sector is highly unionized and predominantly female. Because unions have been successful at enforcing pay equity laws in the public sector, women tend to receive equal pay for work of equal value. That’s not the case in the private sector, where pay equity laws are frequently flouted and women get paid less than they’re worth. The problem is women being exploited in the private sector, not overpaid in the public sector.

Clearly there is a propaganda war on our wages, and the sunshine list is the province’s annual gift to them.