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Tim Hudak’s Got a $10 Billion Hole and Nothing to Say

September 28, 2011

3-minute read

In every leaders’ debate, everyone watching is looking for the zinger – the moment when an important question is asked and one of the participants stands there with his or her mouth open, with nothing to say.

It doesn’t always happen. But it happened to Tim Hudak in the Ontario election leader’s debate on Tuesday night, when he was challenged on the $10 billion hole in is platform’s budget and he had nothing to say.

If Tuesday’s Ontario leader’s debate was a poker game, the player with the biggest bluff to carry off was Conservative leader Tim Hudak – a gamble that he would not be called to account for the astonishingly large cuts in public services on which his platform’s fiscal viability depends.

Well, the bluff didn’t quite work. Hudak didn’t account for those cuts.

The numbers tell the story very clearly. There is a gap between the costs of the Conservative platform and the revenue available to pay for it, and that gap will have to be filled with unacknowledged and unspecified public service cuts amounting to $4.4 billion a year by 2015-16 on a fully-rolled-in annual basis; a total of more than $10 billion over four years.

That is crystal clear from my detailed analysis of the platform valuations and forecasts that have been prepared by the three major parties.

Because the parties have agreed not to disagree on baseline revenue and expenditure forecasts and, remarkably, have embraced the same deficit reduction targets and timetables, the entire debate really revolves around how each platform adds up, or doesn’t.

The first thing that strikes you when you look at the three platforms is how much bigger the Conservative platform is – measured in fiscal impact – than either of the others. My analysis shows that the total value of the promises in the Conservative platform is approximately $4.4 billion, compared with the Liberals at $1.8 billion and the NDP at a net $2.9 billion.

The second is that the three parties’ differ markedly in the role played by tax cuts in their platforms. Nearly 80% of the fiscal room in the Conservatives’ platform is required to pay for tax cuts. The NDP’s platform uses just under 40% of its fiscal room for tax cuts. About 16% of the Liberals’ fiscal room is devoted to tax cuts.

But the real issue – the issue that had Hudak squirming nervously all night and left him gaping and mumbling at the end – lies in where the parties find their fiscal room.

Of the three parties, the source of the NDP’s fiscal room is the most transparent. Its most prominent source is the party’s promise to return the provincial corporate tax rate to 14%. The other major sources of fiscal room for the NDP are largely in common with the Liberals, in revised estimates of debt service costs and recognizing permanent savings revealed in the 2010-11 Public Accounts.

The Liberals take a bit of a gamble, funding about half their platform from new revenues and expenditure savings arising from revised forecasts, but at least it is clear where the party is counting on getting the funds.

The Conservatives’ platform, on the other hand, is anything but transparent. Although it is never stated explicitly, almost all of the fiscal room required to pay for their very ambitious platform comes for cuts in public services.

Not public services in general: public services other than health, elementary and secondary education and postsecondary education, which they say will be protected.

Factor in the province’s interest payments on the public debt, which are not optional, and the $4.4 billion in annual expenditure cuts required to fund its program have to come out of other expenditures which, by 2015-16, would have to be cut back to $30.7 billion.

That means that, to make the Conservative platform work, these “other expenditures” will have to be cut by 14% relative to the baseline forecast.

So what are these “other expenditures”? Environment? Children’s and Family Services? Municipal Affairs and Housing? Northern Development and Mines? Natural Resources? Transportation and Communication? Justice? No details.

No indication of what might be on the chopping block, except for a broad hint that some of it will come from downloading more services onto local governments. See a property tax increase coming, anyone?

If this has a familiar ring to it, it should. Almost exactly a year ago, Toronto mayoral candidate Rob Ford was assuring Torontonians that massive cuts could be introduced without any impact on services.

The only difference between what has happened in Toronto and what would be expected from a Hudak government: in Toronto, because local government services are so visible and its processes so open, Rob Ford couldn’t hide the impacts. At the provincial level, with the government protected by size, remoteness and cabinet and budget secrecy, Ontarians wouldn’t be so lucky.

Anyone who hoped for succinct and compelling stories that capture what each party’s election would mean for the future of Ontario would have been disappointed.

That’s what makes the numbers so important – they are the window into what the parties actually intend to do if they are elected. In Tim Hudak’s case, the numbers reveal clearly what he struggled all night on Tuesday to keep hidden: there’s a $10 billion hole in his budget that can only be filled by public service cuts that he isn’t prepared to tell you about right now.

Hugh Mackenzie is a Research Associate with the CCPA. Click here to read his detailed analysis comparing the three parties' fiscal platforms.

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