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LETTER: Budget should focus on social impact, not economic gain

Government based on a quarterly balance sheet will continue to disappoint and fail, costing more in the long run, says letter writer
Doug Ford
An Orillia letter writer has some advice for Ontario premier Doug Ford. Chris Young/The Canadian Press

Once again it is budget time. With the current spate of strikes, disruptions, and international health concerns, the concept of fiscal responsibility as it pertains to government remains a hot topic.

In such a discussion, some folks will look to business as the model for government management and budgeting. "If only they ran this like a business." Let's look at how that might work.

Health care

The products are medical and pharmaceutical interventions serving to keep customers healthy/alive. When there is an increasing number of customers the business must increase the availability of product or reduce the scope of the customer base.

Where receipts (whether insurance or government provided) lag, the business must adapt - either cutting corners, eliminating unprofitable product lines, reducing personnel, stacking patients in corridors, or raising prices.

If we follow the logic of a proposed two-tier health-care system, those customers least profitable to the corporate bottom line (and most costly to insurance companies) will be the first to feel the effect of one or more of these ‘business’ decisions.

Some folks or their employers might afford good insurance, but insurance carriers have a long history of minimizing payouts, reducing coverage, demanding exhaustive paperwork, and regularly increasing premiums paid by individuals and business. OHIP does not.

People without disposable income will be unable to access health products and suffer, self-medicate, or die.

Education

The products of education are informed and capable worker-citizens. Yet, funds spent on educating children also tend to improve the overall condition of a society - not just fill the employee pool.

An educated youth provides the energy, innovation, and drive to sustain a society and economy into the future. We all pay into this to ensure a solid future.

Using a business model, one might do a profit-loss statement and note the portion of the student population requiring more than average expenditure to reach productivity.

A business efficiency might recommend eliminating those less productive students as target customers and focus resources on those who show less cost-per-outcome. Business would also look for economies of scale - lumping greater numbers of students into each class, outsourcing essential services, or seeking cheap, temporary staff.

Government cannot take this approach. We are responsible for all the youth passing through our education systems, not just the privileged or exceptional few.

Infrastructure 

A business responsible for bridges and roads might look at a certain overpass and determine the cost of repair exceeds the cost-benefit ratio for that overpass and so it will be closed.

Those people relying on that overpass will simply have to find another way, resulting in traffic congestion and delays. A business running a private freeway might determine that shareholder return is insufficient and to increase payouts to shareholders, will raise the toll rates far above the real cost of maintaining the road.

We cannot ration education for those who cannot afford to pay and claim it is an efficiency. We cannot ration health care, claiming it is unaffordable because our customer base is requiring more intervention.

We cannot simply remove public arteries because it is not bottom-line feasible to maintain them. Removing a target market or selected customers simply forces that cohort to drain from another part of society. So, while streamlining long term care standards or packing more kids into classrooms might seem logical to an MBA, it costs us all far more in the long term.

And, long-term thinking is what is needed.

People tend to believe that they are saving money because they have less immediate expense, as with a BOGO sale at Walmart. A token cut in annual provincial tax sounds like a great deal for an individual. But, the power and health of a society is in numbers - not individuals – in the power of what might be called "human capital compound interest.”

Not all people will use all services, yet taxes support all services, so they are available when someone has a need for them.

A business might shut down a costly bridge rather than go into debt to maintain it. A business might shut down schools rather than repurpose the buildings to expand educational options. A business might eliminate shifts to secure the bottom line and stop plowing streets that are less travelled.

Government does not have this option. Government cannot pick and choose a customer base depending on profitability - to do so is a recipe for disaster. A government has to offer services based on improving the overall condition of the population.

One area where government might learn from business is in measuring return on investment. A government's investment is in its people - we are the commodity of government. Measuring the quality of life might supplant GDP as a measure of success.

For example, increasing ODSP payments from $490 to $2,000 per month would immediately open a market for housing contractors and landlords.

It would open a market for training of workers - and for adapting workplaces - which would benefit more than the ODSP population. It would reduce dependency on food banks and social services as people become able to sustain themselves and pay taxes. It would be an investment in human capital and the dividend would be a healthier, more productive population with less cost to the taxpayer in other areas.

A government has to budget based on building this human capital over several generations. Deficits (lines of credit) are a fact of life, in business as well as government.

Government based on a quarterly balance sheet will continue to disappoint and fail, costing more in the long run.

Base your decisions on long-term social impact, not short-term economic gain; taxpayer spending is an investment in a better society - we are all the shareholders

Dennis RIzzo
Orillia

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