Ontario Government's Pay-the-Rich Schemes

Why Not Declare a Moratorium on Debt-Servicing Payments and Increase Investments in Social Programs

In a backgrounder seeking to justify its proposed new Protecting a Sustainable Public Sector for Future Generations Act, 2019, the Ford government admits forecasting $13.3 billion in interest payments to the financial institutions holding Ontario's debt for fiscal year 2019-20 alone. The backgrounder says this amounts to "$1.5 million of interest paid every hour of every day."

The government makes clear that those who hold Ontario's debt are the priority and must receive their pound of flesh before "a single dollar can be spent on schools, hospitals or transportation." Making the big financial institutions a priority is presented as "making Ontario fiscally sustainable" and a justification for the anti-social offensive and attack on workers' rights. In fact it reveals that the rights and claims of Ontarians are subject to how much is left over after paying interest on the debt and other claims of the financial oligarchy. This is a form of the neo-liberal trickle down theory that demands the aim and direction of the socialized economy be to pay the rich and not meet the claims of the people and society.

The backgrounder ignores how the provincial debt came into being and for what reasons, why the government borrowed money from private moneylenders in the first place when it has its own financial means, and how much of the private debt has already been repaid over and over again through the magic of compound interest.

If the backgrounder were really meant as a source of information and not disinformation it would itemize how much of the borrowed money from private financial institutions went straight back to them in pay-the-rich handouts, bailouts, subsidies, loan guarantees, tax cuts and other schemes -- usually called incentives to invest, and how much of the initial debt has already been repaid in full. The pay-the-rich direction for the economy with its trickle down nonsense is not sustainable and needs a new direction to meet the claims of the people and society.

An example of how these odious public debts are racked up in order to pay the rich is the recent write-off of $3 billion dollars by the federal and Ontario governments to auto monopoly Fiat Chrysler. The Ontario government wrote off its share, a $445 million loan, saying it had "no legal recourse" to collect it while the federal government wrote off their $2.6 billion share prior to this in March, also claiming that it could not be collected. The loans were issued by the governments of Canada and Ontario in 2009 as part of getting autoworkers to accept massive concessions.

Chrysler was subsequently given to Fiat without Fiat paying a cent and all its main debts covered by government bailouts to a spun-off "old Chrysler." A spokeswoman for Ontario Finance Minister Rod Phillips told Postmedia that “because of the way government financing works, we can’t pursue, and the Feds either can’t really pursue, something that doesn’t exist anymore [...] and because it was a joint-structured funding bailout [...], once the feds made the decision they were writing it off, the province also cannot recover the funding.”

Sustainability for the Ford PC government means, in practice, that money must be taken from social programs and public services, and from the workers who provide them, to sustain debt servicing payments to the biggest financial interests and to provide pay-the-rich incentives for those same private interests to invest.

Not surprisingly, political representatives of the financial oligarchy are the very ones in government bleating about cutting social programs and public services, the necessity to violate the rights of public sector workers, and above all else "sustain" the current pay-the-rich direction for the economy. They are placed in positions of authority to decide government policy either as Ministers of Finance or government-appointed consultants.

To give a few examples, former Liberal Finance Minister Charles Sousa worked at Royal Bank of Canada (RBC) Financial Group for more than 20 years, primarily as Director of Commercial Banking and Director of Marketing at RBC Dominion Securities. Don Drummond, appointed by the McGuinty Liberal government to advise how to restructure public services to ensure payments on the debt and deficit were sustained, was Senior Vice President and Chief Economist for the TD Bank from 2000 to 2010. Much of the direction he set out in his Commission for the Reform of Public Services is what is now being taken up by the Ford government, especially as concerns the restructuring of wages and benefits throughout the public service and increasing class sizes in education.

The more the Ford PC government presents its anti-social measures as aimed at saving the province from financial ruin, the more it exposes itself as unfit to govern and incapable of finding or even thinking about any alternative to the unsustainable pay-the-rich direction of the economy. Taking into account all the facts makes a pro-social alternative to the government's "solution" and priorities apparent. Why not declare a moratorium on debt-servicing payments and increase investments in social programs instead of cutting them?

This article was published in

Volume 49 Number 25 - August 31, 2019

Article Link:
Ontario Government's Pay-the-Rich Schemes: Why Not Declare a Moratorium on Debt-Servicing Payments and Increase Investments in Social Programs


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