Minister Peter Bethlenfalvy's Remarks at the Canadian Club
The Path to Balance: Protecting What Matters Most
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Today, I will talk about the challenges our government inherited, and I'll share with you an important announcement about how we intend to address these challenges through cooperation and consultation.
You've heard it before, and it's true: Ontario does not have a revenue problem. We inherited a spending problem. The previous government failed to set clear fiscal priorities, and this approach jeopardized the things that matter most.
The reason we are focused on controlling spending, balancing the budget, and restoring sustainability to government, is because that is the only way we, as a province, can protect:
- Our hospitals
- Our schools
- Our public services
- Safer neighborhoods
- Safer streets.
Balancing the budget and restoring accountability to our finances is not just a fiscal imperative. It is a moral imperative. We owe it to our children and grandchildren — who, for better or for worse, will have to live with the consequences of the decisions that governments make today.
Ladies and gentlemen, I'm here to tell you that — unlike past governments in Ontario — or the current government in Ottawa — we will never forget that the real victims of deficits and debt are our children and grandchildren. And we will not let them down.
But this means we need to have a frank conversation about what it is that actually fuels the deficit.
My friend and colleague Minister Vic Fedeli will share our government's budget next week and it will include our path to balance. It is going to be an important day in Ontario's history.
But when we talk about controlling spending or managing expenditures, we must realize that a central component to this conversation is public sector compensation.
Now, as the Minister responsible for the Treasury Board Secretariat, I oversee labour relations with our public sector bargaining agents. As President of the Treasury Board, I oversee all expenditures of government and the multi-year planning process, which provides an important foundation for the budget.
As such, the confluence of compensation and the ability to pay for the things that matter most is of particular interest to me.
In Ontario, public sector compensation represents roughly half of all expenditures for provincial employees, totalling $72 billion annually, and employing over 1 million people across multiple sectors. This is an area of public policy that we cannot ignore.
In 2009 everyone had a deficit. Today, provinces like British Columbia, Quebec, Saskatchewan and New Brunswick all have or project surpluses. Why should Ontario continue to be an outlier?
Ladies and gentlemen, responsible fiscal management is serious work and has serious consequences.
The decisions made by government matter.
If you don't value what you have here today, and if those who represent us don't make the right decisions, our children will inherit something far worse — we cannot just pass the buck onto them.
As you know, because of poor choices and irresponsible spending, Ontario was left with a $15 billion deficit and inherited a $338 billion debt when the McGuinty-Wynne Liberals left office. That's nine zeros behind those numbers; an astounding amount of money. The Province's debt-to-GDP ratio went from 27 per cent to over 40 per cent during that time — a number not seen in Ontario's history.
Because of the rise in debt levels, Ontario's interest payments on debt are now the fourth largest line item and it costs us $1.4 million to service the debt every hour. That's over $30 million a day that is not going to roads, hospitals, transit systems, and front-line services. It is money that is not going to what matters most.
Since 2003, Ontario's debt has increased by almost $200 billion. The question we must all ask ourselves is: what did we get in exchange for an additional $200 billion debt burden?
Is your life $200 billion better? The answer is no, not even close.
While government expenditures have doubled over the life of the former Liberal government, did your health care double in quality?
Is our children's educational experience twice as good?
Did the transit system in this province double in size?
Is the economy operating at twice the level it did in 2003?
Again, the answer is clear. The answer is no, not even close.
Therefore, it is time for a new approach, and one that puts the people at the centre of every decision.
In a previous speech, I spoke about "the challenge of our generation". And to summarize, it is the failure to prioritize precious taxpayer dollars on the programs and services that matter most, while modernizing government.
In the six months since that speech, from the vantage point of President of the Treasury Board, in meeting with stakeholders and weighing every single expenditure that our government has made, I realize that it is far deeper than that.
In addition to protecting what matters most, we must also concern ourselves with confronting intergenerational inequity and doing everything in our power to cushion future financial and economic shocks. That's not ideology speaking. It's about prudence, fairness and responsibility.
One of our first decisions as a government was announcing that we would launch an Independent Financial Commission of Inquiry to look into the government's past budget practices, alongside an external line-by-line review of government spending by EY Canada.
From those reports came some very compelling data. For one, we learned that, had expenditures increased in line with population growth, 2017-18 expenditures would have been $330 billion lower over 15 years.
That's right, a basic sense of fiscal prudence could have virtually eliminated the entire provincial debt.
We are blessed in this province with abundant resources and economic wealth.
Yet, our province is now the most indebted subnational jurisdiction in the entire world.
Our home, right here, in Ontario.
Simply put, this puts our autonomy, and our freedom at risk.
But let's get back to the central pivot of my remarks here today, which is expenditure management and the role of compensation.
Let me be clear, our public sector workers have earned their generous compensation. I am amazed every day by their hard work, dedication, and diligence. But we must be honest about what we can reasonably afford while ensuring the sustainability of government programs and services.
Last week, I tabled the 2018 Public Sector Salary Disclosure, more commonly known as the Sunshine List.
In 2018 alone, the total number of employees making over $100,000 increased by over 20,000 people. Since 2003 the list has grown by more than 600 per cent and is now over 150,000 individuals.
In fact, if you lived in Ontario 15 years ago, and you didn't work in the public sector, your income on average would have been 30 per cent lower than the average Ontario public sector employee.
Today, that gap is still the same.
It's no surprise that even Canada's Parliamentary Budget Officer has indicated that Ontario's current fiscal policies are simply not sustainable over the long term.
I talk about this every day in my work as President of the Treasury Board. I talk about numbers so much that when folks struggle with how to pronounce my last name they just refer to me as "the numbers guy".
And I'll tell you, these numbers are just as sobering to talk about now, as they were when I first started talking about them back in 2009 when I was working at DBRS. But things are starting to look up, because we have a plan. And it's a plan for the people.
Ours is a plan to modernize, to find efficiencies and protect programs and services.
Eight months after being elected, we've cut the deficit by $1.5 billion, bringing it down to $13.5 billion, and we're not stopping there.
This past summer, our government received feedback through the extensive Planning for Prosperity consultation process, which generated more than 26,000 ideas for change.
As the President of the Treasury Board, I'm proud to stand here today and say our government is continuing to listen to the people of Ontario, and that we are delivering on our campaign commitments. So far we have:
- Moved to centralize procurement across the public service, saving the people a projected $1 billion in just five years
- Just last month, we announced reforms to the electricity system to drive efficiencies and lower electricity rates for medium and large employers, so they can continue to grow their businesses and create jobs
- We promised we would create and protect better paying jobs, including those skilled trade "white collar jobs of the future". And we're bringing quality jobs back to Ontario by cutting red tape. In fact, our government is working hard to reduce red tape by 25 per cent by the year 2020
- We promised to end hallway health care. On this, I would note that the Minister of Health Christine Elliot has announced that our government has already allocated over 7,000 long-term care beds, fulfilling almost half of our commitment toward bringing in 15,000 new long-term care spaces over five years
- More recently, the Minister delivered a modernization plan to fix the public health care system by focusing on the patient and families in a way that will better serve their needs
- We've implemented a hiring freeze — with the exception of essential front-line services — as well as a freeze on discretionary spending, and restrictions on travel, meal and hospitality spending
- We paused all pending compensation adjustments for all public sector executives while a full review takes place
- And in December, we created the Audit and Accountability Committee. This is a new sub-committee of Treasury Board that will oversee internal audit services and ensure more scrutiny and discipline in our fiscal process.
As you can see, we have been very busy.
The bottom line of all of this is that we will continue to take steps like this, which will restore sustainability to the province's finances now, and for years to come.
It has been almost a year since we were elected, and we're taking everything we learned in 2018 and putting it into practice. We're modernizing programs and services, breaking down silos across government, and we're being strategic with every taxpayer dollar.
And that is why, I'm announcing today that this Spring, our government for the people will commence a new series of consultations with a specific focus on our public sector bargaining agents. Our goal will be to explore how compensation growth can be managed in a way that results in wage settlements that are modest, reasonable and most importantly sustainable.
We are beginning a conversation. Feedback received through these discussions with our province's public sector employers and bargaining agents will directly inform our government's next steps to responsibly manage growth in compensation.
Examples of these next steps could include measures, such as:
- Voluntary agreement to wage outcomes, lower than the current trend
- Trade-offs that will lead to reductions in compensation costs, and;
- Consideration of legislative measures.
These are just examples. We are looking forward to engaged and collaborative consultations, and all options are on the table.
Today, bargaining agents and employers alike will receive detailed invitations outlining the specific questions we are looking to address during these consultations.
I'm confident that we can work together to ensure that every taxpayer dollar invested is done so in a fair and sustainable way.
As our government continues to deliver relief to families, we are putting people first by leveraging our service delivery partners' collective knowledge and ideas. We know that programs and services have been put at risk by allowing the deficit to spiral out of control. This harms all of us and puts our most vulnerable at risk.
Just as we started with "why", I would also like to end with "why". The challenge of our generation is to make choices that protect what matters most, like front-line programs and services, while confronting intergenerational inequity and future financial shocks.
Ladies and gentleman, this is a "province-building moment" that if done right, will see a more sustainable Ontario for this generation and for future generations.
But this will take all of us... working together... to ensure that, all times, we are keeping "the people" at the centre of every decision.
After all, the proper management of public finances is not just a fiscal imperative. It is a moral imperative.