Every finance minister with even a dram of savvy knows that a critically-important part of the job description involves finding new and innovative ways of keeping the supplicants feeling somewhat defeated as budget day approaches.
In that distant era of federal surpluses, Paul Martin, it often appeared, would order the drones in the finance department to take incoming revenue estimates and hack off a zero or two so no one got too excited about spending the windfall. More locally, city financial officials ritually low ball assessment growth estimates and put out imaginary “pressure” numbers to scare the minions and the activists.
But Dalton McGuinty’s Liberals have devised an artful variation on the theme by first hiring and subsequently un-muzzling TD Bank economist Don Drummond.
This past week, Drummond, an ex-Department of Finance official with impeccable Liberal connections, came out with some scary pronouncements on future provincial spending and the credibility of the Liberals’ deficit predictions. Don’t for a moment think he’s freelancing: lacking a majority and faced with the increasingly imminent realities of budget-making in an aging society, the Liberals are more than happy to have Drummond serving as their in-house prophet of doom.
Much of the attention will fall on the two big spending programs — health care and education, with special focus on the former, given the Harper government’s recent decree that the 6% funding escalator, a fiscal artifact of the Liberals’ 2004 federal-provincial health accord — will go the way of all flesh.
Health and education, as Martin Regg Cohn points out, soak up 80% of all spending, which is why Drummond has warned that all ministries will face major cuts, perhaps as steep as 30%. But in this budget cycle, I don’t think he’s playing the usual fiscal mind games.
Which leads me to infrastructure in general and Metrolinx in particular.
While Drummond and the pundits weren’t talking about this aspect of provincial spending, it’s inconceivable that the province’s long-term infrastructure plans – among them the Metrolinx Big Move strategy and the $8.2 billion Eglinton-Scarborough Crosstown — will emerge unscathed.
Over the next three years, according to the Ministry of Infrastructure, the province plans to spend $35 billion on a broad range of capital projects — sewers, schools, hospitals, bridges, and, of course, transit/transportation ventures. Thirty per cent of that number is $10.5 billion, just so we’re all clear on the math.
With Metrolinx still a year or so from offering up the big reveal on its financing strategy for the $50 billion/25 year Big Move plan, the lion’s share of the transit spend is drawn from the general revenue pot that is under pressure. And, as is clear from this overview, Queen’s Park doesn’t want those squeezed dollars just to pool in the City of Toronto. For all the obvious political considerations, the Liberals want to leave transit legacies in Waterloo, Ottawa and parts of the 905.
So what to do?
I’m guessing Dwight Duncan’s officials are now taking a good hard look at the $2.1 billion premium for burying the Crosstown for that ten-kilometre stretch between Laird and Kennedy — you know, the part where the right-of-way is wide enough to land a 747 with room left over for drive-thrus.
Sure, Metrolinx and Mayor Rob Ford have a memorandum of understanding – “non-binding,” as this document notes dryly – about submerging the Crosstown and pretending it’s a subway, a decision I’ve described previously in this space as the single costliest transit mistake in the city’s history.
But if you’re part of the province’s red-pencil brigade and looking for ways to pare government spending without impacting service, Ford’s plan must surely be a leading candidate. After all, the Crosstown burial ritual is politically contentious, technically complicated, financially risky and, from the perspective of service utility, pointless. What’s more, it is, as Renew Canada Magazine noted earlier this month in a widely-circulated assessment, Canada’s most expensive infrastructure scheme right now. I’d defy anyone to come up with a project wearing a larger bull’s-eye.
Now say you’re Mark Towhey, the mayor’s chief policy guy and spin-meister. His current headache is going to become a lot more migraine-like in weeks to come.
When McGuinty, in early 2010, moved to delay/reduce/slash (depending on your ideological biases) the Transit City plan in the name of fiscal probity, former mayor David Miller first went ballistic and then took to the TTC’s PA system to decry the changes. But Miller was a left-leaning/transit-expansion kind of guy, so no one was shocked to hear him calling for the expenditure of public funds.
Ford, well, that’s a different story now, isn’t it? As a fiscal hawk, he can hardly come out strong for spending money the province doesn’t have. Ford also wants a real life subway, the impossibility of which Gordon Chong will outline in February.
So if Dwight Duncan says the money for burying Eglinton is no longer on the table, Ford et al will be left doing their sucking/blowing routine. After all, in times of severe financial restraint and a shrinking job market, Ford and budget chair Mike Del Grande can’t just keep braying about the 2010 electoral mandate to justify their transit fantasies. A year into their term, they surely know that voters want all sorts of things, many of them contradictory (“More services! Less taxes!”).
As the #CodeRedTO supporters no doubt realize, a moment of reckoning is, ahem, about to pull into the station.
My prediction is that it will arrive in the form of Don Drummond’s 2012 provincial budget, at which point the mayor may have no choice but to mind the gap.