Being in Toronto for the Rimini Conference in Economics and Finance 2012 and standing in the shadow of Queen’s Park has led me to contemplate why the Ontario government is suddenly being so mean to its teachers. After years of Dalton McGuinty as the education premier with an expansion of education funding and programs, the government does seem to have become rather uncharacteristically harsh-imposing new contracts to prevent wages increases.
Provincial spending on elementary and secondary education has grown significantly over the past decade despite declining student enrolment. Since 2002–03, student enrolment has declined from 1,997,000 to 1,877,000, a decrease of 6.0 per cent, or 0.7 per cent per year on average. Despite this decline of 120,000 students, there are about 24,000 more teachers and non-teaching staff in Ontario’s publicly funded schools. If teaching and non-teaching staff had declined since 2002–03 proportionally to the decline in enrolment, there would have been 35,000 fewer teaching and non-teaching staff in Ontario’s schools in 2010–11. The combination of increased funding and declining enrolment has led to a 56 per cent increase in per-pupil funding from $7,201 in 2002–03 to $11,207 in 2011–12. (Drummond, Commission on the Reform of Ontario’s Public Services, p. 204).
So, why the uncharacteristic shift after years of increase? Well, two possible reasons come to mind. It could be that the Ontario government has finally had a fiscal epiphany and realized that provincial spending was indeed unsustainable in the wake of the revenue slowdown brought about by the recession and a 15 billion dollar deficit. The Ontario provincial government is now atoning for its previous fiscal sins. The pursuit of the recommended expenditure growth targets of the Drummond Report in the areas of health and education in particular are certainly evidence of this. On the other hand, spending still seems to be somewhat erratic when one considers the recent situation at the province’s air ambulance service – ORNGE – as well as the recent news that 98 percent of provincial civil service managers got their bonuses this year or the ongoing saga of the cancelled power plants and the spending that entailed. Given the story about bonuses, it does seem odd that the provincial government has yet to fully rein in the civil service envelope while opening up fronts with the teachers and the doctors.
The other reason driving the government’s behavior is likely to be political theater. After all, it does seem that in the world that we live in, politics trumps economics and Ontario has a minority government. Ontario is having two provincial by-elections to be decided on September 6th - one in Vaughn (Toronto area) and the other in Kitchener-Waterloo. If both ridings go Liberal, then the McGuinty government will have its coveted majority.
The Vaughn riding was held by liberal stalwart Greg Sorbara and is very likely to go Liberal again. The Kitchener-Waterloo riding was Conservative and held by Elizabeth Witmer, who resigned when she accepted a provincial government appointment to the Ontario Workplace Safety and Insurance Board. There may indeed be a calculated strategy underway here. To win Kitchener-Waterloo, the Ontario Liberals are wooing the Conservative vote in Kitchener-Waterloo with a demonstration that they are indeed fiscally prudent and responsible. What they may be saying is as follows: Vote Conservative or NDP and the minority government will continue with all the fiscal uncertainty that it entails. Vote Liberal and give us a majority and we will indeed be fiscally responsible, as we have been showing you with our hard line with the teachers. We can be trusted to discipline the teachers. Look, we are going to legislate them back to work just like a Conservative government would do!
In many respects, this is really a mini-provincial election on the future direction of Ontario’s fiscal strategy and one can expect all three parties to make a major effort. What happens once September 6th arrives? If the Ontario Liberal government gets its majority, the teachers will be back at work and despite the bad feeling, there will be three years in which the government will eventually be able to kiss and make up. In the interim, the provincial finances will hopefully have improved enough to patch things up in a financially meaningful way. If the government does not get its majority, then there will likely be a continuation of the hard line not only with teachers but across the broader public service in order for the government to stake out its position as a prudent fiscal manager in time for an election likely by the spring. In politics as in financial crises, there is never really an end, only a regrouping towards the next election (or financial crisis).