Five seriously austere measures that aren’t in the Drummond report

From alcohol duties to the Queen’s pay–here’s what others are doing to stretch their budgets

Roger Blackwell/Flickr

Economists have long warned that current spending patterns have put Ontario on track for a fiscal doomsday. In an attempt to show Ontarians the way to economic salvation, Premier Dalton McGuinty appointed a commission on public-service reform last year, headed by former TD economist Don Drummond. His report, unveiled on Wednesday, is a 362-item long laundry list of cost-cutting (and a few revenue-boosting) measures the provincial government should consider to keep the public deficit from ballooning to $30.2 billion by 2017-18. The prescriptions go far beyond the usual calls for budget freezes and capping wage increases in the public sector; Drummond recommends scrapping all-day kindergarten, increasing class sizes, and shutting down casinos. To make Ontarians feel better about the coming age of austerity, we’ve put together a list of the five most unusual ideas other governments have considered or implemented to fix their own beleaguered finances. 

1. If you can’t remember it’s yours, it’s ours

Even before the great recession dug deep into Americans’ pockets, reducing income tax revenues across the U.S., several state governments had occasionally been spending money that wasn’t really theirs. We’re talking about so-called abandoned property, or stuff people leave behind and forget to claim: bank deposits, uncashed paycheques, unused credit on gift cards, the contents of safe-deposit boxes, stocks, and so on. All U.S. states have unclaimed-property laws that require banks and companies to hand over to the state any dormant asset they’re left with–the idea being that public authorities will do a better of job of tracking down owners and reuniting them with their forgotten property. That’s the theory, anyhow.

But according to a 2008 investigation by the Wall Street Journal, “states from Massachusetts to California have turned their programs into big money-makers, and routinely dip into unclaimed assets to cover state expenses.” (You can read the article here, the link opens a PDF.) Back then, the Journal revealed, unclaimed property was Delaware’s third-largest source of revenue, accounting for US$365 million in fiscal 2007. According to another Journal article published this week, the state of California has a forgotten check for US$659.01 with Angelina Jolie’s name on it, New York state has at least two checks that belong to Rudy Giuliani, and Illinois has just under $100 from Ezekiel Emanuel, the brother of Chicago’s mayor. Is it really too hard to locate these guys?

2. Get the people drunk

There was something counter-intuitive in Irish Finance Minister Brian Lenihan’s 2010 austerity budget: the government was introducing tax cuts on a number of alcoholic beverages. The duty on a pint of beer or cider, as well as that on a half-glass of spirits, would fall by nearly 20 cents, while the duty on a bottle of wine would drop by over 80 cents. With unemployment soaring past 10 per cent and the economy shrinking by 7.5 per cent that year, had Irish lawmakers decided to encourage the beleaguered taxpayer drown her sorrows at the pub? Not quite.

The move was actually meant to boost public revenues coming from the sale of alcohol, which had dropped drastically after penny-pinching drinkers started deserting the pub and swarming to Northern Ireland to buy cheap drinks. Alcohol sales fell by 6 per cent in 2008, the worst slide in 25 years for Ireland’s $9-billion drinks industry, the Irish Times noted. According to the same article, in 2009 the state was set to lose over $130 million in tax revenues due to cross-border booze-shopping alone. Lowering the duty on alcohol, then, was a sleek move to lure the Irish back to the local pub, thus revamping the consumption of domestic pints and of tax inflows from them.

3. Taxes by any other name

At $480 (U.S.), California’s fine for running through a red light is the steepest in the world, according to the San Francisco Chronicle. It’s also a lucrative source of cash for public coffers. Red-light cameras, installed at intersections all over California, are estimated to bring in $80 million annually to the state and another $50 million to cities and counties. One camera in Oakland reportedly generates over $3 million a year by itself. Of course, there’s nothing wrong in slamming drivers who race through a red light, but a number of California motorists say authorities are making it too easy to commit an infraction. They even have an advocacy group—the Red Light Camera Protest Group.

For one, they say, yellow lights are too short. An experiment conducted in the city of Fremont, south-east of San Francisco, showed that adding 0.7 of a second onto the yellow light of a busy intersection produced a 62-per cent drop in red-light camera tickets. And according to a study conducted in South San Francisco, 98 per cent of the city’s red-light camera tickets were for rolling right turns.

Most other U.S. states charge about $100 for running a red light, and the second-highest fine of the kind in America is $250. Ontarians may want to take notice of the fact their own red-light camera penalty is $325.

4. Show off your assets

In a bid to lure more foreign movie-makers, Greece’s culture ministry recently cut the cost of a permit for a film shoot at tourist attractions like the Acropolis, Delphi, and the Temple of Poseidon at Sounion by over half, from $5,000 a day to just over $2,000. In addition, taking photographs of ancient ruins now costs $256 per day, down from $385. And the Acropolis will also be up for rent, officials say. This week Greece agreed to $3.3 billion-worth of budget cuts in return for $170 billions in rescue funds–the country’s third bailout package since 2010.

5. Yes, even you, your majesty

Austerity spares no one, not even the Queen of England. The royal household will have seen its funding cut for six successive years by 2015. According to the Daily Telegraph, Queen Elizabeth II has seen her pay steadily dwindle since since the financial crisis began. In 2009, she made $60 million, a steep drop from the $122 million she made in 1992.

There’s more. British taxes will no longer cover the travel expenses of William and Kate, whose whirlwind tours will now be financed by Prince Charles. And with the royal budget squeezed, repair work on palaces will likely be delayed at least until 2015. The Queen has also agreed to make some rooms at St. James’s Palace available as party venues during the 2012 London Olympics. Companies with close ties to the royal family will be able to rent the spaces for corporate events.

The British sovereign, for her part, is doing her best to lead by example. “You don’t really realize, but the Queen is going around Buckingham Palace, turning off the lights, having fewer staff, even turning the heating down,” Ingrid Seward, editor-in-chief of Royal magazine, told ABC News. “She sometimes even writes letters in her very own fur coat.”




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Five seriously austere measures that aren’t in the Drummond report

  1. Heh…ain’t gonna happen…anymore than most of the rest of that stuff in the Drummond report.

    • Clever response  – are you of Greek heritage?

      • Yours wasn’t very clever….just a personal attack.

  2. - what really needs to be put in the spotlight is the fact that Cdn governments have spent some two trillion dollars over the last few years on fraudulent, odious debt. What Happened   http://www.rudemacedon.ca/what-happened.html  .  They’re going to keep stealing, of course, as long as ‘we’ let them. 

  3. Ontario’s red light fine is literally criminal.  The people of Ontario are saps for allowing it to happen.

    • Running a red light has always been illegal.

      • In some jurisdictions the yellow is so short, the light may have been green when you entered the intersection, but red when you exited it, at posted speeds.

        This usually happens on the outskirts of cash strapped municipalities in the States, as a way to create revenue from passing traffic.

        • The light has to turn red before you enter the intersection, and before any picture is triggered, here.

          •  But what’s happening is that peeps enter on a yellow (or even green) and the camera snaps them if it super-quickly turns to red before they’ve made it through the intersection. Now, I’m a public transit user and have close to zero sympathy for the b*tching of drivers, but still, that’s sleazy…

          • That’s how it’s supposed to be.
            The problem as I mentioned above, is when some jurisdictions have the cameras set to trigger the moment the light turns red, coupled with incredibly short yellow lights.

      • Congratulations for that wonderful observation.

  4. Governments have no rights to expropriate dormant assets.  No right.  That’s criminal as well.

    • Would you are to quote the law that supports this fabrication of yours?  In actual fact governments DO have this right, but few chose to do it because of the probably political backlash. 

  5. Well the other thing that Drummond missed, because he wasn’t mandated to look at it, is increasing revenues in the form of taxation. Half of the business ledger isn’t even examined and is missing from the debate because anti-tax fanatics swarm and bully any pundit or politician who even suggests that might be part of the solution.

    • Government is not a business.  And your respect for democracy is lacking – if it were just fanatics against higher taxes, that would be no big deal.  It’s the majority of the population, your neighbours, that you are calling fanatics. To raise 18 billion in taxes requires $2400 per worker. Per year. And that’s assuming sucking $10,000 per family of four out of the economy does not destroy it in the process.

      How many families have an extra 10 grand per year lying around for McGuinty?

        •  You did not answer my question.  How many families have an extra 10 grand per year lying around for McGuinty?

          • Don’t make up shit.

          • This is basic math.  The deficit is 18 billion.  Ontario has 7.5 million workers – that includes everybody full time and part time.  That’s $2400 per worker.  If you have a two parent family with both parents working and two teens working part-time, that’s 10 grand need from that family.  If you have a two-income family with two younger kids, then you need 5 grand per year from that family.  That’s just to close the deficit. Per year.

            Also note that, if nothing changes, the deficit is expected to rise past 30 billion. That will be over 4,000 per worker per year.

            Also note that this is just the provincial government. OAS costs are expected to increase. Federal spending on
            health is rising 6% per year. So the feds need to find cash or cut as well.

            So, how many families have thousands of dollars per year lying around for McGuinty?

          • @s_c_f:disqus 

            Since there is no such plan….it’s basic bullshit

            You need straw for a strawman argument.

        • not to dig out ONtarioooooo

          • Ontario is part of Canada….but keep that kind of nonsense up, and it may leave.

      • So you don’t tax the lower end. You tax more from those who can afford it, or from those who are merely legal fictions. That seems pretty obvious.

        On the other hand, how many families will be able to afford childcare once the province takes it away as Drummond recommends? How many people will find it’s cheaper to not work and take care of the kids at home and so have to quit?

        The problem is that the changes Drummond is suggesting mostly hit those who are already in poor straits.  At least with taxation, you can target it to those who won’t feel as much pain.

        •  ”The problem is that the changes Drummond is suggesting mostly hit those who are already in poor straits”

          There is simply no truth to that.  Absolutely none.

          • No? So ending all day kindergarten, forcing working parents to find some other means to handle child care, doesn’t affect those who are poor moreso than those who are well off?

            Larger class sizes don’t primarily affect those who can’t afford private schools?

            What there’s simply no truth to is your comment.

          • There were 600 recommendations or something like that, and that’s the best you could do? 

            Large class sizes is hitting the poor?  Really?  Two income families with a child that is kindergarten age?  That’s the poor?  Really?

            The modern definition of poor is rather elastic. You’re talking about essentially everybody. 90% of Ontarians use public schools and two-income families are not poor. Sorry, but that’s simple reality.

            And you used the word “most”.  So of course, these two policies you mention that are supposed to be the ones afflicting the poor the most I assume, but in reality they are not targeting the poor at all, and these are the two you picked.  And thats the best you could do?

            How about the racetrack recommendation?  The poor can’t gamble at the racetrack no more!  How about the doctor pay recommendation?  Those poor starving doctors are in such dire straits now. 

            Heck, if you don’t like the recommendations, whatever.  But throwing out your left-wing talking points doesn’t make much sense here.

          • I picked the recommendations listed here, as those are ones most people here would be familiar with.

            Tell me, how do those two recommendations affect the well-off? They don’t, not at all. As such, the effects of the recommendations are felt primarily by the poor.

            See, that’s what you’re not getting, just because they happen to everyone doesn’t mean everyone feels the same, but the ones who do feel something from them tend to primarily be the ones who can afford it least.

            Incidentally, if you thing a family having two incomes means they’re not poor, you simply need to join reality, and maybe take a moment to actually look at those around you who are suffering.

            Then again, that’d require a remote bit of compassion or empathy.. so.. perhaps not, eh?

          • There is in your flat tax plan.

          • Who, other than you, is talking about some sort of flat tax plan?

      • Your foaming at the keyboard proves my point s-c-f.

        I couldn’t even suggest taxation ought to be studied as part of the solution without my “respect for democracy” being questioned. Who made you the arbiter of what can and cannot be discussed in a democracy?

        •  You’re the one calling everybody else “fanatics”, not me.  Heck, you can discuss hula hoops for all I care  If you do, that’s what I’ll call it: hula hoops.  If you’re showing lack of respect for democracy, then that’s what I’ll call it, because that’s what it is.  When you call the majority of the population a bunch of extreme fanatics, then that’s a lack of respect for democracy.  Period.  Now take a valium.

          • No valium required at this end. I’m quite reasonably suggesting that if there is a crisis, and that is the tone of the Drummond Report, it’s completely baffling that it’s offside to even suggest there should also be some study of how to increase revenues including taxation.
             
            That could be things like a tax on securites, increasing resource royalties,increasing corporate taxation in general, increasing sin taxes, increasing income taxes for the wealthy and so on. I don’t think there’s anything close to a majority opposed to those taxes, for instance, and it’s anti-tax ideology that prevents that from even being on the table.
             
            Pop psychologist heal yourself (Is valium even still available?)

          • Didn’t the dear leader promise ‘NO NEW TAXES”?

    • taxation got us in this mess in the first place

  6. Liquidity Trap.  As a business owner with an MBA I am amazed that the economic pundits do not recognize that the economy is in a liquidity trap.  Consumer spending is stagnant.  Businesses have no incentive to expand production while consumer spending is stagnant, despite ready availability of investment funds. This is a liquidity trap.  MacroEconomic analysis seems to have disconnected from MicroEconomic reality.  Businesses need consumer spending.  Although Keynesian spending is not the solution to a structural economic problem, cutting programs that have substantial economic multiplier will aggravate the liquidity trap.

    • Keynesian spending is the solution, so long as we remember that once things are moving again, Keynesian taxation and cost-cutting kicks in.

      Too often government’s seem to remember the former, but are loathe to proceed with the latter.

      •  You just invented the phrase “Keynesian taxation”.  It doesn’t exist.  There’s no such thing.  Keynes is rolling in his grave.

        • He might have invented the phrase “Keynesian taxation”, but he didn’t make up the underlying idea. Keynes did.

          Keynes was quite clear that in the good times taxes are supposed to be raised, extra spending reduced (basically automatic for things like EI and deliberate for things like winding down infrastructure spending) and debts cleared off (and even surpluses built up). Unfortunately, governments of all stripes are loathe to cut spending and raise taxes in good times; the Federal Liberals did better than average in the early 2000s, but they still raised spending and cut taxes to the extent they could.

        • Indeed, and it’s as much a phrase as Keynesian spending. However, because I actually know what I’m talking about, I don’t have to content myself criticizing nits that anybody with an ounce of background understand.

          •  You know what you’re talking about?  You make things up as you go along.  There’s never been any such thing as Keynesian taxes.

          • Nor Keynesian spending in any formal sense. What there is, is counter-cyclical spending and taxation. Look it up.

            Who knows, you might even learn something.

      • @Thwim:disqus The issue with Keynsian spending is that it is advocated to maintain the flow of money during an economic slowdown.  Keynsian spending, of which we have had lots, employs existing resources; however, Keynesian spending does not address a structural problem in the economy.  Whereas other government programs will address structural issues, and lead to fixed capital formation.  Spending on infrastructure and education tends to encourage private sector investment and fixed capital formation.  (Sustained investment in these is not Keynsian spending.)  Also, Government spending on advanced technology provides substantial stimulus to fixed capita formation (e.g.: procurement of ships for the Navy and Coast Guard.) 
         
        From about 1945 until 1980 industrial nations sustained high levels of spending on infrastructure and education, and there was concurrent high fixed capital formation.
         
        As to Liquidity Trap.  One of the effects of a Liquidity Trap is to encourage consumer indebtedness; because, corporations try to increase sales by extending credit to customers.

    •  I’m not an economist and don’t know the lingo N.P., but is what your saying this? Every day/alternating day in the press there is an article saying a) Canadians have way too much debt, wayyyyyyy to much personal debt and it’s going to kill us all!- and then on an alternate day b) Canadians aren’t spending enough, spend, spend more people or it’s going to kill us all! I swear this pushmepullyou never ends….

  7. This article should have been headlined ” five seriously irrelevant and frivolous comments that should never get published”.  And the MSM wonders why people are turning to internet media for news and information. 

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