The faulty premise for the Drummond Commission

| February 13, 2012
Don Drummond. Photo: Canada 2020/Flickr

Since the Ontario government's appointment of the Commission on Broader Public Sector Reform in the March 2011 budget, Ontarians have been told repeatedly that the province's deficit and debt must be reduced through public sector spending cuts. The premise for the creation of what is now known as the Drummond Commission is that eliminating the $16.3 billion provincial deficit by 2017 is paramount and Ontario's public debt is ballooning.

The argument of governments, banks, and credit rating agencies around the world today is that deficit and debt must be urgently eliminated for the sake of future generations. The future benefit for future generations is presented as being worth the immediate cost of cuts to health care, education and other common goods required by all to survive -- particularly in a moment of ongoing global economic crisis.

From a common sense point of view, the logic does not hold. If we have a house do we sell it because it carries a mortgage and we do not want to put our children in the potential position of having to make mortgage payments? No, we keep our house so that we have a place to live and we swallow the pill of mortgage and interest payments as part of a world reality in which banks and lenders are mightier than most.

When it's insisted that debts must be paid quickly and the common goods must be sold it simply means that the lenders want the money sooner because they are worried they may not get it later. The common good, therefore, is sacrificed for the lenders' good -- though the lender has already accumulated far more than most people combined will ever have.

Why is government borrowing to begin with? By not taxing the lenders and the wealthy, government lacks the base from which to uphold the common good. Government puts the common good in the pocket of the lenders, by both borrowing and cutting. Take for example, Ontario hospitals unable to meet the cost of fulfilling peoples' needs due to insufficient funding from the Ontario government which then cut registered nurse positions. Between April 2009 and August 2011, mainly in Ontario hospitals, 2,550 registered nursing positions have been cut.

The "only solution" then becomes to transfer the common goods from the pocket of the lenders to the wallet of the "innovators." "Innovators" are private interests like the multinational long-term care corporations which have taken over Ontario's long-term care sector. In 1999 the Ontario Ministry of Health and Long-Term Care created the Capital Renewal Program and began subsidizing private profits by granting money to companies to create desperately needed long-term care beds. Thirteen years later, some 23,000 ill and elderly people in Ontario are waiting for beds because the private "innovators" are not keeping up with demand while making healthy profits.

Given all this, it is no surprise that the Ontario government appointed Don Drummond, a former bank economist and known pro-privatization advocate to design a "reform" of health care and other public services in Ontario.

Offering an altogether different approach, "Fixing the Fiscal House: Alternative macroeconomic solutions for Ontario," is a research paper recently released by the Ontario Nurses' Association, the union of registered nurses and allied workers of Ontario. Drawing on post-2008 public investment measures adopted in China, Brazil, Australia and Kenya, the paper demonstrates how the Ontario government can be a leader in bringing the Ontario economy out of economic crisis for the common good, including eventually eliminating the deficit and debt.

ONA's recommendations for fixing the economy and the fiscal house

1. Given decreasing employment in the private sector in Ontario, persistently low levels of private-sector job creation, and decreasing exports, the Ontario government should avoid creating more unemployment in the province, whether it be through the elimination of positions in the Ontario Public Service or expenditure decreases in public health care, education and other social programs. The Ontario government should bolster employment, and hence domestic demand in the economy, by increasing investment in public services and social programs, thus continuing the work of undoing the damage caused during the reign of Mike Harris.

2. In the area of health care, the Ontario government should commit financial resources to create an additional 9,000 permanent full-time equivalent RN positions by the end of fiscal year 2014-2015 in order to begin addressing the particularly low RN-to-patient ratios in Ontario relative to other Canadian provinces. A plan establishing targets and conditions for annual base funding, by sector, should accompany the financial allocation.

3. Additionally in the area of health care, the provincial government should commit to and enforce the principle of not substituting or replacing RNs with registered practical nurses, given that both acute care and chronic care to a certain degree require the expertise of registered nurses. In the long-term care sector, a minimum staffing standard should be funded and regulated at an average of 3.5 worked hours of nursing and personal care per resident, per day, including 0.68 RN hours per patient per day. The skills, knowledge, depth and breadth of practice of RNs are key to improving patient outcomes and reducing to an extent, health-care delivery costs.

4. Building on its Poverty Reduction Strategy goal of reducing child poverty by 25 per cent by December 2013, the Ontario government should work with the federal government to initiate the mass construction of low-income housing in Ontario, thus working toward reversing the deficit of social spending in Ontario relative to the majority of Canadian provinces.

5. In order to eliminate the province's structural deficit, the Ontario government should develop a schedule to increase state revenue through taxation of corporations and the wealthy, beginning with cancelling the reduction of the corporate tax rate to 10 per cent.

6. To fulfil the 2009 G20 Pittsburgh commitment to put quality jobs at the heart of economic recovery, part of the coordinated G20 stimulus plans to which Canada was a signatory, the Ontario government should work with the federal government to establish job creation targets in various areas. This should include job-intensive green job creation and fully subsidized skills training programs accessible to all unemployed and underemployed workers.

For the full research paper see:
http://www.ona.org/publications_forms/research_series.html

Salimah Valiani is an economist and policy analyst with the Ontario Nurses' Association.

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