For [Ontario’s] Dwight Duncan, grim warning is a blessing in disguise – by Adam Radwanski (Globe and Mail – December 16, 2011)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

One of the world’s leading credit-rating agencies has provided the most urgent warning to date of the perilous financial condition of Canada’s largest province. But Moody’s Investors Services has also done a big favour to the man in charge of that province’s books.

Ontario Finance Minister Dwight Duncan has been struggling to persuade both his fellow Liberals and the general public that it’s time for some blood on the floor. And now that Moody’s has changed its outlook on the province from “stable” to negative,” he should have an easier time finding a receptive audience.

While Ontario has for the time being maintained its credit rating of Aa1, the agency warned that an inability to tackle debt and deficit problems could lead to a downgrade. That could both dissuade investment in the province’s already struggling economy and add to the borrowing costs of a government currently $16-billion in the hole – conjuring images of the turmoil that has recently engulfed Europe.

Mr. Duncan will be reluctant to draw that comparison too much, at least in public, and, indeed, Ontario is still a long way off from Greece or Italy or Spain. But he may not entirely mind if others do so, because as the most hawkish member of the provincial cabinet, he’s in the early stages of a pitched battle over how tough the next budget should be.

It was only this fall that Dalton McGuinty’s Liberals campaigned for re-election on a moderately optimistic message about Ontario successfully navigating its way through stormy economic seas. Along with the other two leading parties, they glossed over the austerity measures that would be required of the provincial government in the months and years ahead. So Mr. Duncan now faces a tall task in making the case to Ontarians that, in fact, it’s time for major spending cuts.

But perhaps his biggest challenge is internal. While he has some support in the Premier’s Office, most members of his party did not enter public life because they wanted to make government smaller. Nor, in a minority government, are they necessarily eager to risk falling on unpopular austerity measures. But Mr. Duncan needs his colleagues, fellow ministers in particular, to drive those measures down through a bureaucracy that has its own reasons to resist them.

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