Weathering the Storm:
Why the public sector is
key to Ontario’s economic recovery
The current recession did not start
in Ontario, but it is hitting us hard.
Job losses in manufacturing,
mining, forestry, transportation, and construction have slashed incomes.
Families are hurting. Demand for goods and services is down; so are tax
revenues. This is putting pressure on government budgets, public services, and
the people – all Ontarians – who depend on them.
Some pundits say that now is no
time for public spending. With tax revenues falling, they say government should
cut spending, cut wages, and cut public services.
This approach would be
counterproductive in the extreme. The public sector is vital to our well-being.
It provides public services we need, and public sector jobs mean economic
stability for families and communities.
OPSEU believes the public sector is
key to Ontario’s economic recovery. The points on the following pages should be
foundation stones of government strategy in the 2009-10 budget and beyond.
1. As demand for private
goods and services slumps, demand for public services spikes.
Private sector job losses are
caused by falling demand for private sector goods and services. In a recession,
demand for public services does not fall – it increases dramatically.
As job losses mount, many
Ontario-funded employment services have seen demand for their services rise by
more than 100 per cent. Meanwhile, the number of people on social assistance is
rising. Some municipalities are already reporting double-digit increases. This
requires more money for social assistance payments – which cities do not have –
but also more staff to handle applications and help recipients. Ontario Works
should not be funded by the property tax base. It should be fully funded and
delivered by the province.
Women’s shelters, Children’s Aid
Societies, and children’s mental health programs are just three of the many
social services that see increased demand as families struggle with economic
stress. Yet workers in these areas fear layoffs, not more resources, in the
months ahead.
In health care, no one is willing
to delay needed diagnoses, surgeries, or treatments simply because they got sick
at the wrong time. Nor should they be. Recession or not, an aging population
needs more health care. Unfortunately, Ontario hospitals expect to lay off some
5,000 workers this year – from nurses to respiratory therapists to cleaners. In
long-term care, Ontario has the lowest staffing levels of any province. Home
care is still provided by the lowest bidder, with predictable impacts on quality
of care. Both sectors are in desperate need of rebuilding.
During any recession, many workers
head back to school for retraining. January 2009 saw a 10 per cent jump in
applications to Ontario community colleges compared to a year earlier; that
trend will only increase this year and into 2010. Colleges are already turning
away qualified applicants (Algonquin College in Ottawa turned away 6,000 last
year). The college system needs more faculty and staff. Despite the government’s
Reaching Higher program, Ontario remains 10th out
of 10 provinces in per-student funding of community colleges.
OPSEU membership in the Ontario
Public Service is currently at 41,000 workers, down from 60,000 just after the
1995 provincial election – a drop of more than 30 per cent. Yet the OPS is
tasked with more work than ever before. The Environmental Commissioner of
Ontario stated flatly in 2007 that “The ministries of Environment and Natural
Resources are faltering in a number of core functions such as inspection,
enforcement and monitoring.” Not much has changed since then. Most ministries
have worked in a climate of restraint since the early 1990s.
The McGuinty government has
recognized that enforcement of the improved Employment Standards Act is
inadequate. Just 20 Employment Standards Officers (ESOs) are responsible for
enforcing the law in 350,000 Ontario workplaces. A government promise to hire up
to 100 new ESOs must be kept. If it is, it will actively help the government’s
anti-poverty strategy by recovering unpaid wages for low-wage workers.
Ontario’s total provincial spending
is by no means high. Ontario government spending as a proportion of Gross
Domestic Product ranks seventh among the 10 provinces.
2. The more we support local
demand for goods and services, the faster the recovery will be.
Ontario relies heavily on exports,
but we can only do a little to stimulate demand for our goods and services
beyond our borders. Economic stimulus here at home has a big role to play in the
upcoming budget.
Clearly, the government must borrow
money to match funds available from the federal government for transit and other
projects.
Overall, special care must be given
to make sure that funds disbursed by government are spent, and spent locally.
The surest way to do this is to direct funding into programs targeted at
low-income Ontarians and into much-needed public services and public service
jobs.
3. Public sector spending
supports the economic well-being of Ontario families and communities.
Nearly one in five Ontarians has a
public sector job at the federal, provincial, or municipal level. These jobs
provide services Ontarians expect and demand – not just health and education,
but consumer protection, highway safety, the courts, meat inspection,
developmental services, and so on. Just as importantly, public sector jobs are a
source of spending power in households and communities.
The number of public sector jobs in
Ontario is low relative to other provinces. Ontario ranks eighth in public
sector jobs as a proportion of overall employment.
4. The public sector must
take the lead in planning for economic success.
From the 1960s until 1995, Ontario
had an industrial strategy. Five premiers, from Robarts to Rae, saw an active
role for government in planning, guiding, and supporting the economy. Under
various names, the Ministry of Economic Development and Trade helped save and
create jobs, improve trade, and enhance wealth creation. It encouraged the
growth of high-wage, high-skill jobs. From 1995 to 2003, the Harris-Eves
government took a laissez-faire approach to economic strategy. The Conservatives
left economic planning to business. In the process they created an Ontario with
more millionaires – and more homelessness. The current recession, caused as it
is by a combination of unparalleled greed, deregulation, and income disparity,
should signal the end of right-wing prescriptions for the economy. As we face
key policy challenges like eliminating child poverty (as in the Premier’s
25-in-5 strategy) and designing a green economy (envisioned in the Green Energy
Act), economic planning must be front and centre once again.
The Ministry of Economic
Development and Trade (currently four sub-ministries) must be revitalized. The
government should reinstate the Development Corporations of Ontario and the
Manufacturing Recovery Program and consolidate all economic development programs
in one in-house, one-stop shop. In the past, this vital and successful work was
done by OPSEU members from the banking, finance, engineering, and accounting
professions. It should be again.
5. Ontario needs a deficit
recovery plan that distributes the cost of the recovery fairly.
With an expected budget deficit of
$18 billion over the next two years, the province needs a plan to pay off that
debt over the long term. In the past, public debts have typically been erased by
increased revenues from economic growth and/or cuts to public services.
Public services have still not
recovered from the previous government’s attacks. Funding for many key programs
remains the worst in Canada. Public service cuts and layoffs are ideas from
yesterday that will not work today – or tomorrow
Public sector employees are willing
to pay their share of the cost of the recovery. But it makes no sense for a lab
technologist to lose her job while the successful realtor across the street
makes no additional contribution.
The right way to ensure that the
costs of recovery are borne fairly is through the tax system. This approach
worked when Roy Romanow rebuilt Saskatchewan in the 1990s. It will work for
Barack Obama as he rebuilds the United States. And it will work for Ontario.
The notion that modest tax
increases reduce demand for goods and services and slow economic growth is
incorrect. The lab technologist spends her money just as the realtor does. By
flowing money through the public sector, we can afford the services we need and
rebuild local economies at the same time.
Ontario Public Service Employees
Union, 100 Lesmill Road, Toronto, Ontario M3B 3P8
www.opseu.org • Spring 2009
Authorized for distribution by
Warren (Smokey) Thomas, president.
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