For some reason, it seemed to me like the announcement of Ontario’s record $24.7 billion deficit officially ushered in a new sobering reality about how we will have to deal with governments at all levels over the next 12-24 months, at the very least.
Smart public affairs practitioners are already at work on this. How will it impact your company, your association, or your sector in terms of how you interact with government on various policy fronts?
It will be about more than just restraint. Governments will be looking to both spend less (notwithstanding planned stimulus programs) and earn more revenues. Those twin objectives will have the most profound impact on public affairs programs in a generation in Canada.
As you deal with government in the months ahead on almost any policy framework imaginable, the process will pass through a very strict test relating to that cash bottom line. Expect government officials to ask two main questions: One, do we need to spend money to do this? And two, will this bring any money in?
Think about what it would be like to go to your CEO right after your company reported record losses to ask for a major increase in your department’s budget. That’s a pretty tough ask.
And the problem for Canada’s governments is truly staggering. According to TD Bank’s excellent study the total deficits of all provincial and federal governments this year could hit $100 billion. In fact, the only government in surplus at all is Saskatchewan. As the TD economists wisely note, our governments are staring straight ahead, unavoidably, at even higher costs. “With health care costs double for individuals over the age of 65 years compared to those under 65, and with an increasing share of Canadians collecting elderly benefits over the next decade, the premium on age-related expenditure growth will only rise further.”
We’re not unique in this regard – just look at the State of California’s never-ending budget crisis. Globally, countries around the world are dealing with record or near-record deficit levels, particularly those who led the way in terms of stimulus spending in the face of this global economic crisis: Canada, Japan, the United States and Germany.
So let us face facts. As longtime Parliament Hill writer Greg Weston observed, Canada’s red ink is not going to magically vanish when the economy recovers. This will be a long, slow climb back to balanced budgets.
That calls for a comprehensive rethink about the way your organization approaches public affairs challenges. And if you happen to be in the health care sector in particular – the No. 1 line item for all provincial governments – the time to reset your strategy is immediately, since there’s irrefutable evidence that no government can overcome a major deficit problem without achieving significant spending reductions in health care. I know that at Fleishman-Hillard Canada, our public affairs team across the country is ready to help you navigate this new fiscal reality.
