Don Drummond’s commission released its report into Ontario’s finances last ‎week, and it was perhaps somewhat starker than expected.  ‎

The commission suggests that Ontario is going through a large restructuring, and ‎can’t expect to sustain 3% growth over the next five years, which in turn will ‎lead to lower revenues and larger deficits and more problems if something isn’t ‎done. His prescription is controlled increases in a few portfolios (holding health ‎to 2.5% increases), and a sizeable reduction in a few portfolios (the left over ‎portfolios share the reduction burden disproportionately). One of several ‎contributing factors has been the rising Canadian dollar (supported by rising ‎resource exports) which has helped weaken Ontario’s manufacturing sector. ‎

His bogeymen are Greece and Italy.  Both of them had the train go off the rails ‎relatively quickly as interest rates rose as markets (and rating agencies) became ‎suspicious of their ballooning deficit / debt situations.  His prescription is about ‎avoiding that fate. ‎Regardless of whether he’s exactly right, and whether the government takes ‎his advice literally and enacts the cuts he suggests, there will be spending ‎reductions and balanced budget targets as the goal.  The commission is simply ‎too credible to ignore, and it provides the perfect cover for finding savings that ‎may be unpopular with voters and the opposition.‎

The cuts, while prudent from a risk management posture, will nevertheless lead ‎to a period of limited government stimulus, lots of bickering over each specific ‎cut, and a generally tighter climate where everyone dependent on government ‎financing (the public and very much broader public sector) will see less cash in ‎the system.  From salaries to grants to operating budgets; from hospitals to ‎schools and college students to seniors, the province will look a little less ‎friendly over the next few years.