In a bid to reduce the deficit, Ontario's 2011 budget includes plans to reduce the size of the province’s public service by 1,500 jobs between April 2010 and March 2014 — in addition to the reduction of about 3,400 full-time public service employees announced in the 2009 budget.
A Commission on the Reform of Ontario's Public Services, chaired by economist Don Drummond, is also expected to provide advice on reforms that would help accelerate the government's plan to eliminate the deficit while protecting education and health care — which make up 70 per cent of program spending.
“In the shorter term, the government will accelerate its efforts to make public services more effective and improve value for money by consolidating programs, services and back-office functions; developing new ways to deliver programs; and optimizing the value that exists within Ontario’s public sector,” said the budget.
While the creation of the Commission on Broader Public Sector Reform is welcome, according to the Canadian Federation of Independent Business (CFIB), the budget puts off any rethinking of roles for the public sector until after October's election.
"While we're pleased the commission isn't mandated to recommend tax hikes, action on dealing with the size and cost of government is needed now — particularly the gap between public and private sector pensions," said CFIB's Ontario vice-president Satinder Chera. "Let's hope these measures are a down payment for what's really needed, including steps to rein in those out-of-control arbitrators."
Major agencies — such as the Liquor Control Board of Ontario and the Ontario Lottery and Gaming Corporation — are also being instructed to deliver efficiencies of $200 million by 2013-14 and funding will be reduced permanently for executive offices of specific transfer payment recipients by 10 per cent over two years. This policy will also be put in place for major government agencies.
However, this approach ignores key realities about public services, said Warren Thomas, president of the Ontario Public Service Employees Union, since Ontario already has the third-lowest program spending per capita among the provinces and the second-lowest cost for government administration.
"The idea that we need to cut public services — at a time when we are giving away billions in corporate income tax cuts — is ludicrous,” he said. "The fact that the government has not identified which jobs will be cut says clearly that this exercise is based on political targets, not delivering quality services.”
The 2011 Ontario budget continues to focus on Ontario's economic recovery and the reduction of the deficit. The deficit for 2010-11 is projected to be $16.7 billion — $3 billion lower than forecast a year ago.
Total program spending is projected to come in at $113.8 billion, an increase of less than one per cent, though health and education spending are set to rise more than four per cent in 2011-12. The government forecast overall program spending will rise by one per cent per year between 2010-11 and 2013-14.
But Ontario’s new budget will do little to help the province's small businesses do what they do best — create jobs, according to the CFIB.
"While we are pleased that the deficit is smaller than forecast last year, this is not a budget of fiscal restraint," said Chera. "Twenty of 29 departments saw an increase in spending this year — not just health care or education."
However, job creation has been solid in recent months, with employment increasing by almost 17,000 net new jobs per month on average from November to February, said the government.
“Job creation in Ontario and Canada has been very solid compared to the experience in most other developed countries. While jobs in Ontario are near pre-recession levels, other jurisdictions such as the United States and the United Kingdom have only recovered a very small portion of their job losses — 14.5 per cent and 38.9 per cent, respectively.”