{"id":56569,"date":"2017-01-11T09:00:28","date_gmt":"2017-01-11T14:00:28","guid":{"rendered":"http:\/\/spacing.ca\/toronto\/?p=56569"},"modified":"2017-01-11T10:35:59","modified_gmt":"2017-01-11T15:35:59","slug":"lorinc-cities-need-watch-signals-trudeau-government","status":"publish","type":"post","link":"https:\/\/spacing.ca\/toronto\/2017\/01\/11\/lorinc-cities-need-watch-signals-trudeau-government\/","title":{"rendered":"LORINC: Cities need to heed signals from Trudeau government"},"content":{"rendered":"

\"feature-lorinc\"<\/a><\/p>\n

The little explosion of sweaty news<\/a> last week about an apparently buried federal report<\/a> predicting \u201cdecades\u201d of gigantic deficits added just a bit more fuel to the fire crackling around Justin Trudeau\u2019s feet. The key take away was that net debt levels, driven by anemic GDP growth and an aging population, will crest at $1.55 trillion by the 2050s.<\/p>\n

The short-hand media analysis focused more on that great big scary number than the complex political dynamic this analysis will set in motion.<\/p>\n

I\u2019m not talking about the short-term melodrama. The report obviously feeds into the emerging narrative of the Trudeau government as profligate and beholden to wealthy lobbying interests while increasingly isolated in a world that\u2019s become fixated on the brain-stem appeal of nativist politics. It also gives Kevin O\u2019Leary and the rest of the Conservative leadership pugilists a new talking point, allowing them to change the channel away from Kellie Leitch\u2019s tone-deaf immigrant bashing.<\/p>\n

Rather,\u00a0when I scanned at this report, which is built on the sturdy and seemingly apolitical timber of long-term demographic and productivity analysis, two points struck me:<\/p>\n

One, while the media reports presented the document as something the government released as quietly as a church mouse skittering around on Christmas eve, the language in the document bears the unmistakable signs of a political edit: \u201cAs this demographic transition unfolds,\u201d the unnamed Department of Finance author states at one point, \u201cthe Government will continue to take smart decisions<\/em> and make sound investments<\/em> to build Canada\u2019s economy of the future and create an economy that works for the middle class<\/em> [emphasis added].\u201d<\/p>\n

These, clearly, are not the words of some nerdy government economist.<\/p>\n

So? I\u2019d argue this document was absolutely intended<\/em> to be discovered, thus subtly sending the signal that Ottawa is keeping a watchful eye trained on long-term economic and spending trends.<\/p>\n

And who is the real audience for this information? It\u2019s not the opposition, nor the general public, but instead\u00a0the Finance Department\u2019s internal and external counterparties: various expensive ministries, provincial governments, and other recipients of federal largesse, including \u2014 although none of the analysis made this point explicitly \u2014 Canada\u2019s municipalities, whose leaders still believe they\u2019re poised to gobble up tens of billions in new infrastructure funding.<\/p>\n

Which leads me to point two. The inherent weakness, as well as the implicit message, in such long-term deficit projections is that they\u2019re true until they\u2019re not true, which is to say, up to the moment when the political conditions align to force a response to curtail exponentially growing deficits, as happened in the mid-1990s.<\/p>\n

And this is precisely where municipal leaders need to sit up and take careful notice of what exactly Ottawa is signaling with this piece of passive-aggressive messaging.<\/p>\n

A bit of history is in order. After Brian Mulroney\u2019s Conservatives failed to control the federal deficit in the late 1980s and early 1990s, Jean Chretien\u2019s Liberals took power at a time when the economy was stalled and the far-right Reform Party was making huge gains in Western Canada.<\/p>\n

When the Wall Street Journal<\/em> predicted that Canada\u2019s public finances were in such disarray that we\u2019d soon be unable to sell our bonds in New York, finance minister Paul Martin aggressively began to eliminate the federal deficit, starting\u00a0in 1995. His big move: re-jigging a federal transfer arrangement with the provinces, which, in turn, downloaded a whole host of operating burdens to the municipalities. In Ontario, that fiscal waterfall gained even more energy and momentum after Mike Harris came to power in 1995 promising both tax and spending cuts.<\/p>\n

While all that played out over 20 years ago, here in Toronto, city council still grapples with the fall-out of Martin\u2019s deficit battle: both the massive financial burden that is Toronto Community Housing and the severely curtailed capital and operating subsidies for transit dating back to the 1995-1998 period.<\/p>\n

What the report says, to me, is that at some point in the foreseeable future, we\u2019ll see a reprise (Martin: The Sequel!<\/em>), with similar cascading consequences for revenue-starved municipalities still trying to figure out how to manage the after-shocks\u00a0from the last round of federal deficit busting.<\/p>\n

No one, of course, can predict when that moment arrives. Without explicitly trying to game out national politics, the Department of Finance analysis states that federal debt and deficit levels will only begin to climb to worrying levels in the early- to mid-2020s, which is to say, following\u00a0the next federal election.<\/p>\n

From where I sit, the dynamic of the mid-to-late 1990s may actually be reversed after 2018, with a new Patrick Brown government at Queen\u2019s Park \u2013 yes, it will<\/em> happen \u2013 firing the first shot with an aggressive cost-cutting and downloading agenda that forces the federal Liberals to respond. Likely, they’ll seek to demonstrate they can prevent the trillion-dollar debt-boogey man laid out in this analysis.<\/p>\n

All of which brings to mind the tepid efforts by Toronto council to find new revenue tools to reduce the municipality\u2019s reliance on property taxes and other regressive levies.<\/p>\n

It\u2019s hardly a stretch to describe the proposed road toll and whatever other levies\u00a0council might green light this spring as little more than long-delayed, partial responses to the last round of federal downloading. These moves are much more about plugging old leaks than forward planning.<\/p>\n

Despite the efforts of city manager Peter Wallace to push the city to proactively diversify its revenues, Mayor John Tory and many councillors still seem oblivious to the implications of a Brown victory in 2018, much less the more distant threats hinted at by the Finance Department’s pre-Christmas warning.<\/p>\n

With this analysis, Ottawa has put every bureaucrat in the country, including those working for the City of Toronto, on notice: the fiscal taps will be turned off, perhaps sooner than they think.<\/p>\n

We can pretend not to hear, or we can attempt to learn from the past and look for ways to avoid being sandbagged by some future finance minister. Up to us.<\/p>\n","protected":false},"excerpt":{"rendered":"

The little explosion of sweaty news last week about an apparently buried federal report predicting \u201cdecades\u201d of gigantic deficits added just a bit more fuel to the fire crackling around Justin Trudeau\u2019s feet. The key take away was that net debt levels, driven by anemic GDP growth and an aging population, will crest at $1.55Continue reading “LORINC: Cities need to heed signals from Trudeau government”<\/span><\/a><\/p>\n","protected":false},"author":4051,"featured_media":56577,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ngg_post_thumbnail":0,"_ef_editorial_meta_paragraph_assignment":"","_ef_editorial_meta_date_first-draft-date":"","_ef_editorial_meta_checkbox_needs-photo":"","_ef_editorial_meta_number_word-count":"","footnotes":""},"categories":[2],"tags":[],"class_list":["post-56569","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-politics"],"acf":[],"yoast_head":"\nLORINC: Cities need to heed signals from Trudeau government - Spacing Toronto<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/spacing.ca\/toronto\/2017\/01\/11\/lorinc-cities-need-watch-signals-trudeau-government\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"LORINC: Cities need to heed signals from Trudeau government - Spacing Toronto\" \/>\n<meta property=\"og:description\" content=\"The little explosion of sweaty news last week about an apparently buried federal report predicting \u201cdecades\u201d of gigantic deficits added just a bit more fuel to the fire crackling around Justin Trudeau\u2019s feet. 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