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Index for my Toronto Budget 2004 project
Defending My Defence of Martin

My article crediting Paul Martin for the early steps of his New Deal for Cities and slamming the Mike Harris government for the state of Toronto provoked an angry response from reader SB. We're clashing again along the same lines that we did back in September.

She writes, and I respond:

Hi Andrew,

"... need for financial help is a symptom not of inaction by the federal government ... it's clear that it was the Ontario government and not Ottawa that slashed funding for public transit "

Interesting comments, but I fail to see how a smart guy like yourself can really see it that way:

Fact #1

While the Tory government did indeed take away money from transit, they took away pennies compared to the thousand dollar bills that the Federal Government took away.

From '93 - '02 The federal Liberals reduced funding in transfer payments to the Provinces by over $40 billion. Martin has taken great credit for his strong conservative fiscal policies, but luckily for him, he seems to have escaped virtually all of the blame for the problems that he caused.

Ontario taxpayers saw a net $20 billion taken away from their social and infrastructure projects that was instead used by Mart to pay down the debt.

How can we applaud $53 million when over $20 billion was taken away by the federal government?

I agree that in the 1990s things became more difficult for governments all around. Ottawa reacted and I support Chretien and Martin's moves as necessary in light of the debt and deficit Brian Mulroney left. However, I do recognize that they managed the deficit in a way that passed on some of the hardship to the provinces. Not every province handled these challenges in the same way.

In Ontario, the government of the day had choices to make. But they didn't choose to handle these changes equitably.

If you lived in suburban regions of Ontario, Mike Harris handed you a fat tax cut. But if you lived in an urban area like Toronto, Harris hammered you with targeted re-adjustments focusing the burden onto cities. While the downloading changes of the "Who Does What" days may have been approximately revenue neutral on the whole, they weren't so for each municipality, and instead are the reason that Toronto has such a huge annual hole in its budget.

It is hard for me to place the blame on Ottawa when:

  • Cities in other provinces didn't end up in the same shape Toronto is in
  • Ontario still found plenty of room for handsome tax cuts
  • The Harris government chose to focus the pain on urban non-Tory voters instead of spreading it around equally

Fact #2

GST rebate of $51 million: The federal government decided to charge GST on top of the debt repayment that Toronto (and all of Ontario) taxpayers are forced to pay on the Ontario hydro debt. This repugnant display by the federal government will result in Ottawa reaping a $1.5 billion windfall of the backs of Ontarians! Again, how are we happy with $51 million when $1.5 billion is being taken away?

I have to confess I don't know much about this one. From what you have described, I imagine that we are paying GST on the portion of our hydro bill that goes towards paying down the debt. Unless you are arguing that hydro should be GST-free, I don't see what the problem is. We also pay GST on the portion of our car payments that goes towards paying down General Motors' debt. Etc.

Anyway, the more important points here are that:

  • I don't see anything about this charge that is unfairly focused at Ontario (since I imagine GST applies in all provinces), and so I don't see any reason why this spurred Mike Harris, Ernie Eves and Al Leach to bomb their own cities
  • Even if this tax were to be eliminated, it would make no difference to the $344 million fiscal hole that Toronto is in... unless Toronto were to reclaim this vacated tax room by increasing residential property taxes by about 30%

Fact #3

The federal government has reaped a $41 billion EI surplus, and applied it directly to pay off the debt, as well as other 'goodie' programs that they like. Jesus, I mean if they only took half of what they stole from that program, and gave Ontario its proportional share of the rest, we'd be sitting on a transit fund of over $6 billion!

No, we'd be sitting on more debt in Ottawa and another tax cut from Ernie Eves.

Fact # 4

While serving as finance minister Martin's own personal corporation received at least $161 million (even though he thought it was only 8/10 ths of one percent of that). How can we be happy when his own company received more than we will receive this year?

I don't know the facts of the CSL situation. Either the federal government got $161 million worth of services for the money it spent, or it was ripped off. If the former turns out to be true, then this is not terribly relevant. If it turns out to be the latter, then Paul Martin should resign.

Overall I am happy that Toronto and Ontario will finally get something (11 years too late mind you), and that Martin appears to be ready to reverse the negative tide that he started.

But when you say that it is not a sign of Federal government inaction, and then you start to blame the Tory government again, I am wondering are you being paid by Paul Martin, or is your head just up your ass too far?

Well, I admit to holding a long-term grudge against the provincial Tories. Still, I don't get why severe fiscal problems in Toronto are the fault of the federal government when the problems are clearly not as severe for any cities in any other provinces. Paul's not paying me, so it must be the location of my head.



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