Could the Wynne government do a u-turn on austerity?

It didn’t get much coverage in the mainstream media, but last week the big banks told Federal Finance Minister Jim Flaherty to take his foot off the brake when it comes to public sector spending.

The banks argue with a weakening economy, now is not the time for restraint. That could mean pushing back Ottawa’s target to wipe out a $26 billion federal budget deficit by $5 billion per year.

“You won’t have many economists — or the bond market, which is perhaps a more critical vote — end up criticizing Canada if a couple of years down the road, instead of having a balanced budget, we have a $2 or $3 billion deficit,” CIBC chief economist Avery Shenfeld told the Toronto Star last week.

It’s a rare meeting of minds – the same message is being delivered by the Canadian Centre for Policy Alternatives, who argue economic growth is more important right now than the deficit.

Private sector economists are predicting economic growth in Canada will slow to 1.5 per cent for 2013.

If the economists left and right are telling Flaherty this, then Ontario’s Wynne government must be receiving the same message. This is important — if the provinces and the federal government are rowing in opposite directions, their initiatives would likely cancel each other out.

You can also bet that new Ontario finance Minister Charles Sousa – who emerged from the world of banking – is also listening to his former colleagues.

In the midst of province-wide cuts to community hospitals, this might be a small ray of hope. Former Ontario Finance Minister Dwight Duncan’s last budget set a path for five years of significant restraint. Year one is done and the warnings about fiscal drag – the impact of cutting thousands of well-paid public sector jobs – are coming true.

This has been a particularly tough budget season for Ontario’s hospitals amid a freeze in funding to their base operating budgets.

Yesterday we were in Ottawa with the Ontario and Canadian Health Coalitions arguing before the media cuts to The Ottawa Hospital are neither orderly, planned, or without impact to the community. The suggestion that many of the procedures under the axe will end up in private for-profit clinics is contrary to the Minister of Health’s earlier assurances that hospital services would migrate to non-profit health providers.

The Champlain Local Health Integration Network is hardly showing due diligence. There is no transparent plan – The Ottawa Hospital appears to be making it up as they go along. Depending on which managers union representatives speak with, the story continually changes. Workers tell us they are waiting for the second shoe to drop on layoffs following an expected report on outpatient services at the hospital. The LHIN is also refusing to treat the alleged service transfers as an integration decision, claiming that the hospital is merely following its accountability agreement. LHIN CEO Chantale LeClerc is satisfied with the hospital’s assurances, but there has been no reasonable verifiable assessment of the impact of these changes on cost, accessibility or quality of care.

It’s a clever line to suggest this is really about restructuring, but the hospital CEOs that are talking privately to us fully admit the present environment is about cutting services. They have little choice with funding restraint from Queen’s Park and pressure from the LHINs to balance their budgets – something neither the federal or provincial government appears capable of themselves.

It is interesting to note that hospitals appear to be gapping significant numbers of positions in anticipation of job cuts. Gapping involves not filling vacant positions for extended periods of time.

While it would be nice to think that Human Resource managers are having some empathy for long-term employees by holding open positions for those likely to be displaced by the cuts, there is also a significant financial incentive. By facilitating job transfers rather than exits, hospitals stand to save considerable severance costs.

That means the real impact of the present round of restraint will be on young health professionals seeking to find work. Young people are more mobile in their career choices, meaning an entire generation of health professionals trained in Ontario’s medical schools could soon be off to greener pastures. Not all provinces are hammering their health system like Ontario.

Given an aging workforce, this could be a problem for HealthForce Ontario when sunnier economic times re-emerge and health service providers start casting a net for younger workers to replace thousands of retirees.

The last time we saw restraint like this was during the Harris years. It took a lot of money to fix the damage to the system. Are we about to repeat that mistake?

Health care is not a market. People just don’t decide they’d like to go to hospital. You don’t stop getting ill because economic times are tough, although the stresses of a tough economy often pile up as increased demand on the health system.

Will the Wynne government make a u-turn? For the sake of our health system, let’s hope so.

One response to “Could the Wynne government do a u-turn on austerity?

  1. The only thing missing from our government regarding health care services and hospital infrastructure standards is clarity. Right now there are at least 75 communities across Ontario that have been reduced to “crossing their fingers” and hoping that some day their respective communities get funding to save or improve their aging hospitals.

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