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Matthew Lau: Spending so vast they can’t track it

Ont-Strong-Mayors 20220829
Ont-Strong-Mayors 20220829

With a week left in September and nearly six months after closing its 2021-22 fiscal year, the Ontario government finally released its Public Accounts. As the C.D. Howe Institute’s William Robson and Nick Dahir observe, public companies on Canadian stock exchanges with a fiscal year end on March 31 would have had to publish their financial statements before the end of June. Governments, unfortunately, are not models of efficiency, accountability, or customer or investor service.

But now that we finally do have the Ontario government’s financial statements, what might we learn from the numbers? The bottom line shows a $2.1-billion surplus, driven by revenues coming in $31.1 billion (or about 20 per cent) higher than budgeted. Program spending excluding reserves came in under budget by $2.5 billion, or about 1.4 per cent, driven mainly by lower education spending — itself a result of lower-than-expected student enrolment, among other factors. Although the positive fiscal variances versus the budget came almost entirely from the revenue side of the ledger, somehow the opposition NDP and Liberals both managed to conclude that the government’s $2.1 billion surplus was evidence it spent too little.

“The Conservative government was withholding so much money,” the NDP lamented, “it ran a $2.1-billion surplus.” What people should understand is that the NDP sees any fiscal balance, positive or negative, as evidence of government underspending. In 2020, when the province’s Financial Accountability Officer was projecting a $37.2-billion deficit, the NDP complained the Conservatives were “penny pinching” and “withholding $9.3 billion.” In NDP-Land surpluses, deficits, rainfall, sunshine, too much salt in the soup or too little, green leaves in summer and orange leaves in fall are all evidence of government underspending. And not spending other people’s money means you are “withholding” it.

There is, to be fair, one area in which the government might reasonably be seen as underspending: on health care professionals. The real problem in health care is government control, but so long as the government is controlling health care it should at least pay doctors and nurses properly. It currently does not, and its refusal to pay them what they are worth has, along with overregulation and licensing, created a significant shortage of both. But this does not translate into evidence of general government underspending, nor does the case for increasing or reducing medical professionals’ salaries depend on the fiscal balance.

To conclude that Ontario’s Conservative government is underspending is to implicitly accuse its former Liberal government of underspending by even more. Program spending was 17.6 per cent of GDP last year. When Kathleen Wynne left the premier’s office in 2018, it was 17.3 per cent of GDP, already far too high after 15 years of Liberal governing. With few exceptions, there is overspending everywhere in government: health care bureaucracies, post-secondary funding, inefficient services, and the years-long upward march of public school spending even as the quality of education has deteriorated.

The government’s meddling into economic development — its insistence on reorganizing and reallocating resources within the private economy when it cannot even manage its own affairs properly — provides perhaps some of the best illustrations of government waste. On top of nearly $2 billion in pandemic-related relief, the Ministry of Economic Development, Job Creation and Trade again disbursed many millions of dollars in transfer payments (taxpayer handouts for which no goods are purchased or services rendered) to a wide range of businesses across various industries.

Some examples: $49.9 billion to software company Open Text Corporation, $35.0 million to video game developer Ubisoft Toronto, $23.2 million to manufacturer 3M Canada, and $12.3 million to Maple Leaf Foods. It gets worse: Huawei, unaccountably, was near the top of list of recipients, receiving $5.1 million in taxpayer handouts. Other seven-figure sums went to companies in industries ranging from pharmaceuticals (Sanofi Pasteur, $7.0 million) to transportation (Thales Canada, $4.1 million) to food (Gay Lea Foods, $2.7 million; Minute Maid, $1.9 million; and Ferrero Canada, $1.8 million). No matter the industry, evidently, government won’t hesitate to shove private business costs onto taxpayers.

Be it subsidies to private businesses or overspending on its own operations, there are few places where the provincial government could not deliver significant benefits to Ontarians by cutting spending. And on top of taxpayer savings, there would be a collateral benefit to spending cuts: with fewer expenditures to keep track of the government might manage to publish its financial statements on time.

Matthew Lau is a Toronto writer.