Drummond drops “a brick” on Ontario

Ontario received a fiscal wake-up call as former TD chief economist Don Drummond dropped 532-page “brick” on the government’s lap.

His warning was stark: Adopt all 362 recommendations or watch as the deficit doubles by 2017-18, sending the total debt to $441.4 billion.

“Ontario’s finances do not yet constitute a crisis, and with early strong action a crisis can be averted,” the report states. “The lessons of history and of what is happening elsewhere today are clear: the government must take daring fiscal action early, before today’s challenges are transformed into tomorrow’s crisis.”

The province’s debt is still “relatively small” by international standards and its spending “is neither out of control nor wildly excessive,” the report states. But “unprecedented” action must be taken over the next six years before Ontario drowns in red ink.

The province must cap annual growth in program spending at just 0.8%, which would slash real program spending by 16.2% for every man, woman and child, the report advises.

Peter Drake, vice-president, retirement & economic research, for Fidelity Investments Canada agrees with the report that Ontario is not in a deficit or debt crisis yet, but points out that lessons from overseas have demonstrated how quickly the situation could deteriorate.

“The Ontario government is facing additional demographically-driven expenditures at a time when it already has a large cyclical budget deficit,” he says. “The government must come up with a credible multi-year deficit reduction plan. That is, a plan that will eliminate the deficit that is both credible and realistic to financial markets and rating agencies.”

Annual spending growth in health care must be capped at 2.5%, education at 1%, post-secondary education at 1.5% and social programs at 0.5%. Spending in all other programs will have to be cut by 2.4%.

About a third of Drummond’s recommendations were directed at health care, which will need to become more efficient in order to maintain services without the generous budget increases of past years.

Ontario should band together with the other provinces and federal government to buy drugs, tie public drug plan benefits to income, allow nurses, physician assistants and pharmacists to provide more services where possible, and divert patients who don’t require acute care out of hospitals and into less expensive care and accelerate the adoption of electronic records.

It should follow Nova Scotia and require emergency medical technicians to provide home care when not on emergency calls, have doctors talk to their middle-age patients about end-of-life care such as living wills, give its regional health networks much more power to oversee care in each region and resist the temptation to build more long-term care homes and focus instead on home care.

Staff, with files from The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.