Over the two fiscal years between 1995–96 and 1997–98, Martin achieved an impressive $33-billion turnaround in Ottawa’s fiscal position, moving from a $30-billion deficit to a $3-billion surplus. The economy had helped him by providing $21 billion of that figure in increased revenues, but he also cut $12 billion worth of federal spending. By 1997–98, he’d managed to deliver the surplus, a task thought five years earlier to be impossible. He became an international hero for his efforts and was soon, much to his boss’s chagrin, the presumptive next prime minister.
But where did Martin find that $12 billion in cuts? The biggest rollback was in transfers to the provinces, money used to fund education and health care, the two biggest provincial expenditures. Martin chopped almost $8 billion, or 24 percent, from this budget line between 1995–96 and 1997–98, a time when the provinces were all dealing with their own fiscal challenges. Ironically, by 1999–2000 provincial transfers were nearly back to the level they were at in 1995–96. But by then the provinces had already changed their approaches to spending.
So it was in Ontario. Hard hit by the recession, the province was experiencing an extraordinary political shift. Having flirted with the left by electing its first ndp premier, Bob Rae, the province was about to swing hard to the right. Throughout the early 1990s, the province struggled as Rae fought to contain costs and labour unrest as well as manage a dreadful budget situation. The recession was not of his making, but neither did he turn it around. Ontarians didn’t give him a second term to get it right, turning instead to Mike Harris and his Common Sense Revolution.
While Martin was born into the Liberal elite, Harris’s path to power was considerably less preordained. A university dropout, former elementary school teacher, and, yes, golf pro from North Bay, he was elected to the legislature in 1981, where he served as a backbencher in Bill Davis’s government and, briefly, as minister of natural resources and energy under Frank Miller. He cultivated an outsider’s stance, positioning himself as a regular guy from small-town Ontario more in step with ordinary people than with Toronto’s upper crust. For all that cultivated folksiness, he was genial, bright, confident, handsome, and well spoken. He became party leader in 1990, shifting the Conservatives away from the Red Tory centre and further toward the right. By 1994, with an election approaching, he was poised to shift it still more.
The Common Sense Revolution, Harris’s platform for that election, was designed to compare the Tories and their new slay-the-deficit posture with the ineffective, recession-hampered ndp. “In too many cases, wasteful spending has become entrenched in the system,” the manifesto read. “We will weed it out.” The Conservatives promised to deliver a fully balanced budget within four years, create 725,000 new jobs, cut provincial income tax by 30 percent, and reduce “non-priority” government spending by 20 percent, “without touching a penny of health care funding.” Law enforcement and classroom funding would also be safe from cuts, Harris promised. But, he continued, “that does not mean that savings cannot be found elsewhere in the education system. Too much money is now being spent on consultants, bureaucracy, and administration. Not enough is being invested in students directly.”
After Harris’s election, education became one of his many battlefields with social activists, and it proved an especially important one. Critics often pointed to the fact that he named a high school dropout as his first minister of education. Others cited Dalton Camp, who argued that Harris had a “paranoid fear of education.” A particular focus of controversy was Bill 160, the Education Quality Improvement Act, which changed funding structures and forced teachers to work more and with fewer resources — the loudest volley in a program that also included school closures, board amalgamations, and the introduction of standardized testing. Large-scale protests and strikes followed the bill’s introduction, and the hard feelings linger to this day. The shadow cast by Bill 160 over primary and secondary education in Ontario is such that it obscures the dramatic effect Harris’s policies had on post-secondary education.
At the time Harris became premier, Ontario had still not recovered from the deep deficits created during the recession. Having pledged to leave health care alone, he turned instead to education, which was already suffering from a per capita spending decrease during Rae’s tenure. In Harris’s first two years, education expenditures dipped $1 billion, or 5 percent. The centrepiece of this program was a 14.3 percent cut in funding for Ontario universities.
Harris’s cuts were grounded in a belief that the education system was profligate. So even when the economy finally recovered from the recession and he could dramatically ramp up per capita health care spending, he kept education spending flat, and left it that way for his final five years as premier. Consequently, Ontario postsecondary funding, for example, fell by 21 percent during the ’90s while enrolment increased by 8 percent.
Across Canada, other premiers also dealt with reduced federal transfer payments by targeting education spending, though not to the draconian extent Ontario did. By the end of the century, the province’s funding rank per university student had fallen to tenth out of ten provinces. As Rob Prichard, then University of Toronto president, recalls, Harris’s policy “was devastating. These funds have never been restored. New funding this decade has tracked to enrollment growth, but the base per student has never come back.”
Contrast Canada’s response to the 1990–93 economic downturn with that of the United States, which admittedly entered the recession in better fiscal shape than Canada: total deficits in the US across all levels of government represented 4.2 percent of gdp in 1990, before the recession struck. That figure grew as high as 5.8 during the recession, but by 1995 it was back down to 3.1 percent. By comparison, in 1990 Canada had federal and provincial deficits comprising 5.8 percent of gdp, and by 1992 that figure had reached 9 percent. While activists warned about American debt levels, the US did not engage in the dramatic deficit fighting seen in Canada. State systems such as education therefore did not experience the kind of shock Canadian provinces did.
