Toronto Embraces Fiscal Prudence; Guillotine of Spending Cuts Coming?

A guillotine of spending cuts may be headed Toronto's way after a resounding victory by right-wing candidate Rob Ford. Many Canadians wrote me this evening with the good news.

One of the best of them comes from "Bruno" who writes ...

Hi Mish

I am an avid reader of your blog. I wanted to point out a bit of news that would make you smile. The city of Toronto elected a new mayor last night with a sharp turn to fiscal prudence and rejecting the very very left wing it has been saddled with for most of the past three decades.

Rob Ford who is anything but presentable in the conventional context (very over-weight, loud, sometimes obnoxious) was elected by a landslide garnering more than the second and third place candidates combined. His leading opposition was a man named George Smitherman.

Smitherman is a failed provincial minister of health under whom the ministry blew $1 billion in consulting fees for something called "eHealth" that never resulted to so much as a single shovel turning over in new programs etc. It was a solid rejection of the spending class.

Ford has been a city counsellor for several years and was widely detested by the other counsellors because he never spent any of his allotted budget and actually returned calls from his constituents directly. He kept detailed memos of the waste by the mostly left-leaning counsel such as $12,000 retirement parties, rented bunny suits at local events, taxi bills spent by the transit commissioner, etc. He voiced them every week on a talk radio show and built up a momentum behind him sufficient enough to make the strongest statement yet in Canada in favour of fiscal prudence.

Ford plans to cut city counsel by half, out-source garbage collection, reduce government operating budgets, reduce staff through attrition, cut out all perks for city staff, eliminate many grants to thousands of groups, etc. In short, he wants to do many of the things you write about in your blog.

Will he be successful? Time will tell. Has his "end of the gravy train" message resonated? More than any taxpayer could ever have hoped.

Kind regards,
Bruno K.
Toronto

New Era for Toronto

Congratulations to Ford whose simple message "Stop the Gravy Train" resonated with voters.
In addition to Ford's well deserved win, Toronto voters swept six incumbents from city council.

Hopefully US voters respond the same way on November 2.

The Globe and Mail reports Ford’s dominant victory ushers in a new era for Toronto

Toronto has repudiated nearly a decade of liberal-minded city-building, as a city sputtering through a low-wage economic recovery traded big ideas for a new mayor who promised to cut taxes, rip out streetcars and get tough with waste at City Hall.

Rob Ford, the right-wing councillor who few expected to win the mayoralty race when he entered it seven months ago, defeated George Smitherman in a resounding victory last night that was called eight minutes after the polls closed. Mr. Ford won by 11 points, capturing 47 per cent of the vote to Mr. Smitherman's 36 per cent, and led a wave of political change that crashed across the city and the Greater Toronto Area.

The size and scope of Mr. Ford's victory – he garnered more votes than David Miller did in 2003 or 2006 – contradicted every recent poll and confirmed that traditionally progressive Toronto is angry enough about taxes and spending to overlook the Etobicoke councillor's history of gaffes and scandals.

“This victory is a clear call from the taxpayers: Enough is enough and I want respect,” the new mayor said. “And that's exactly what we're going to give them ... the people of Toronto are not divided. We are united.”

Guillotine of Spending Cuts Coming?

The Star asks What happens now? Four turbulent years

Rob Ford, the man billed as Toronto’s worst nightmare, is the city’s 64th mayor.

Sophisticated Toronto has elected as its chief magistrate a penny-pinching councillor who promises to rip out downtown streetcar lines, chop the size of council in half, privatize garbage collection and squeeze as much as $2.7 billion out of the city’s budget.

And he won going away, polling nearly half the votes.

Ten months ago, this was unthinkable. Today, Torontonians spread across the country and the world are wondering, what happened.

More importantly, what happens now?

There will be change – that’s the mandate Ford received, a mandate bigger than anticipated. Television stations declared Ford the winner minutes after the polls closed.

But the change will come more slowly and less radically than the winner’s campaign rhetoric suggests.

Drawing a distinction between his approach and Ford’s, Smitherman said during the campaign: “I am going to control the cost of government by using surgical precision – not lowering a guillotine.”

That nuanced message did not resonate – not mixed in with his other platforms, not when Ford’s singular message was so simple and memorable: “I’m going to stop the gravy train” at city hall.

Can the new mayor recalibrate spending at city hall? Is that Ford’s mandate when so many voted against the eventual winner? Will he be able to implement his platform on a council with a strong contingent of left-leaning politicians committed to thwart him at every turn?

Not all of it. Not as quickly as he thinks.

Transit City, the network of streetcar lines, will proceed because it is the only transit plan approved and funded. And Ford will not be able to rip up streetcar lines. The public won’t stand for that. Council won’t support it.

Issues like contracting out garbage services and ending sole-source contracting and the sale of city assets promise titanic struggles among the left-leaning councillors.

And any mayor who attempts to cut front-line services (cuts in staff lead to cuts in service) will face a revolt from the left and right. So, expect Ford to sweat out lots of savings, just not the large amounts he promised.

So, the revolution will be more in the telling and the election, than in the governing. The next four years promise to be tumultuous.

“The people of Toronto are united around the call for change,” Ford said last night. It may be the last time for quite a while.

Anger Lingers Over Smelly Garbage

Flashback July 16, 2009: Delusional Canadian Economists; Anger Mounts In Toronto Over Garbage Collection

Garbage Piles Up In Toronto

"NiceGuy767" on Silicon Investor is comparing the Detroit Public School system (see Detroit Public School System Ponders Bankruptcy) to the unionized garbage collection system in Toronto.

In a way, the problems of the Detroit public school system is the first wave to hit the beach representing how out of whack things have gotten for government "service" jobs

It may well be that the example of the broken Detroit Public school model is just a precursor of governmental broken models to come.

Today, in Toronto, we have garbage workers, being paid $20 to $50 an hour, out on strike for the 20th successive day leaving the city wallowing in garbage. Not only garbage workers but other related unionized workers, such as day care and park employees, are also out....In this economy, I don't get it. Any unemployed person would happily take on these jobs at 10% to 25% lower pay in this economic environment.

It is now time to enact Reagan-like air-comptrollers legislation and bring in new hires (again plenty of them given escalating unemployment ranks) to clean up the mess.

Strike Hits 24 Days And Counting

Today I asked "NiceGuy767" if the strike was still on. Here is his reply:

Thanks for asking.

Yes they are. 24th day and running.

Apparently there are a fairly large number of strikers, who are unhappy continuing with this strike, but union rules override their angst.

Also, I'm told that Facebook is replete with upset strikers who are compelled to tow the union line.

What is most galling to me is that strikers block the road to the drop off sites, ostensibly, to explain their side of the dispute, which is their legal right. Problem is that there are times when one vehicle is allowed to pass each 15 minutes. Obviously those who consequently wait 3 hours to drop off their refuse aren't too sympathetic to any rationale they can conjure up.

Unions Did Themselves In

The unions did themselves in with their absurd demands, strikes and roadblocks. Ford's message "out-source garbage collection" resonated with the voters at the right time.

Message to Rob Ford: Please do not screw up snow removal. Mayoral elections in Chicago have been won or lost on snow jobs. I am quite sure the same can happen in Toronto.

Legality of Outsourcing Garbage Collection

Inquiring minds just might be wondering about how easy it will be for Rob Ford to get his way on garbage.

Doorey’s Workplace Law Blog discusses this very issue in Can Mayor Ford or Smitherman Contract Out Garbage Collection?

The candidates for Mayor of the City of Toronto are falling over themselves to have us perceive them as the one who will “take on the big unions”. Only Joe Pantolone says he will not attempt to contract out garbage collection. Rocco Rossi and Smitherman will put garbage collection services out to tender to the private sector, noting that even the “unions” could apply. I don’t get the ‘union-bidding’ thing, to be honest. Do they mean that the union would become a garbage collection business, and become the collectors’ direct employer? Or that the union could ‘bid’ in the form of proposing concessions under the collective agreement? I’m not sure, to be honest. Anyone know?

Here’s what front-runner Ford says: “By [contracting out garbage collection], taxpayers will save about $20 million each year and can have the confidence their garbage collectors won’t go on unnecessary strikes.” That number is a guess, since he can’t know what the bids would be. And the promise that there won’t be strikes by private sector garbage collectors is a matter of faith, since private sector garbage collectors can strike too, if they so choose. In other words, contracting out a service doesn’t ensure that there won’t be strikes. Ford also says he’ll make the TTC an essential service so TTC workers can’t strike. That’s a neat trick, since the City has no power whatsoever to declare a service essential (that’s a provincial issue). But, as we’ve seen, Ford doesn’t let a fact stand in the way of a good soundbite.

Now walk through what will happen if the new Mayor tries to contract out the garbage collection, as promised. Can he contract out the work during the existing collective agreement, which runs til the end of the year 2011? That question is governed by the collective agreement “contracting out” language. My quick scan of the document (available here) found this language (around page 42-43):

No permanent employee with ten (10) years of seniority shall lose his employment as a result of contracting out or privatization. Employees affected as a result of contracting out shall have access to the Redeployment provisions of Article 28 and the Layoff and Recall provisions of Article 29…

The City confirms that during the term of this Collective Agreement and any extension by law, there shall be no new contracting out of work of the Local 416 bargaining unit resulting directly or indirectly in the layoff or loss of employment of permanent employees.

The next legal question becomes, is the contracting out of City garbage collection a ’sale of business’ under the Labour Relations Act? The key section is 69. It says, in a nutshell, that the transfer of part of business by any manner of disposition, is a sale of business, and when there is a sale of a unionized business, the collective agreement flows to the purchaser of the business. So, it’s possible that the successful bidder for the work would find itself bound by the very collective agreement that the City is trying to get rid of.

The slant on that blog, if I am reading it correctly, seems sickeningly pro-union. Yet the author does raise some interesting issues that may make it difficult to do what needs to be done: kill the gravy train.

Unfortunately, the contract details do make it appear the city is stuck with overpaid unionized garbage collectors until 2011. In the meantime, however, Ford can proceed with addressing the logistics to make it happen.

Major Attitude Changes

Voters in the UK, Canada, and I believe the US (we will find out soon enough) are finally willing to boot their representatives if they do not exercise fiscal prudence.

This is a major attitude change. Economically it's a good thing regardless of what Krugman says.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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