Hudak’s 100,000 jobs demolition plan: more extreme than the Harris years

May 26, 2014

Progressive Conservative Leader Tim Hudak’s campaign pledge to demolish 100,000 public sector jobs makes his mentor – former Premier Mike Harris – look like a lightweight.

 Between 1995 and 2002, Harris cut about 7,000 public sector jobs, thrusting the province into a period of labour turmoil and eroding public services.

 At the federal level, Prime Minister Stephen Harper has also had a bull’s eye on the back of public sector workers, but even his attempts to cut jobs pales in comparison to Hudak’s pledge.

 The Parliamentary Budget Officer estimates 20,000 federal public service positions have been cut since March 2010, with an additional 8,900 positions scheduled to be eliminated by 2016-17.

 The details around Hudak’s plan is still vague, but let’s try to break it down to see who – and which services – might be affected by that pledge to cut 100,000 public sector jobs.

 Statistics Canada indicates there were 88,483 Ontario public servants in the general government category in 2012, the most recent year of data available.

 This includes the core public service, agencies, boards and commissions (such as Metrolinx, the Ontario Municipal Board, the Niagara Falls Bridge authority and several hundred other organizations), provincial police and judicial employees.

 Certainly, not every job in the provincial government would be axed.  That means the job cuts would have to reach into the broader public sector and impact other service areas, including public education and health care. 

 At his press conference on Friday, Hudak confirmed that teachers would be on the chopping block saying “Will it mean fewer teachers? It does.” 

 Generally speaking, eliminating 100,000 jobs would amount to 15.3 percent of Ontario’s provincial public servants – and a whopping 1.5 per cent of the total jobs in Ontario.

 And the effects won’t be limited to the public service, because government decisions to cut or spend have a multiplier effect on the economy.

 The federal Ministry of Finance estimates the multiplier effect of government spending is approximately 1.5.  That means every dollar the government spends generates an additional 50 cents in economic activity through increased consumer spending, business activity and other second order effects.

 Using that multiplier, we can estimate the impact of cutting 100,000 good jobs out of Ontario’s economy would result in the loss of an additional 50,000 private sector jobs – because those who used to be employed in the public sector would no longer have the money they need to go to movies, eat at local restaurants, or shop. 

 And this might be a conservative estimate, since some areas that could be impacted – such as health care and infrastructure spending – have multipliers larger than 1.5.   

 Back in 1995, the Ontario Progressive Conservatives estimated that the $10.5 billion withdrawal from the Ontario economy  – due to a combination of spending and tax cuts – would act as a fiscal drag on economic growth of 0.4 per cent annually for five years.

 The cuts proposed by Hudak are significantly larger. 

 Add in Hudak’s promise to cut taxes, the potential privatization of revenue-generating enterprises, and those promised job cuts would harshly impact public services and economic growth.

 This demolition plan would also decrease government revenues, because all of those laid-off workers would stop paying taxes.

 Put simply, firing 100,000 public servants would not contribute to deficit reduction – it would likely make paying down the deficit an impossible dream.

 Cutting 100,000 typically middle class jobs out of the public sector would likely jolt Ontario’s economy into a period of decline. It’s not an answer to the need for more and better jobs. And it certainly isn’t how to slay a deficit.

 Kaylie Tiessen is economist with the Ontario Office of the Canadian Centre for Policy Alternatives.  Kayle Hatt is a research associate with the Canadian Centre for Policy Alternatives.

 This opinion editorial was originally published in the Toronto Star.