Remember the Jolly Banker — the Bill Will Come Due
There is an old American folk song by Woody Guthrie called “Jolly Banker.” In it, Guthrie (a noted union activist) depicts a helpful banker with a constant smile who is there for families in need with loans for furniture, lines of credit, and deferred mortgages. Over the course of the song the banker, though remaining jolly, gets more aggressive, demanding repayment at double the price and promising to “rake and scalp” his customers. Though I’ve never agreed with Guthrie’s searing dislike of capitalism, the song has always driven home one point for me: eventually, the bill comes due.
The lesson behind the song still holds during COVID-19, even if few are talking about it. The federal government will have to end the Canadian Emergency Response Benefit at some point out of a fiscal inability to keep paying the bill. Toronto Mayor John Tory has suggested his bills are in the range of $65 million a week, leading to a needed property tax hike of 56 per cent to make up for the shortfall. As Steve Paikin rightly noted in his column this week, raising property taxes by an outrageous amount like that is both a financial and a political non-starter. Despite having no solution to recover the dollars spent, no one seems to be questioning the validity of spending the dollars.
Currently, Rosedale’s millionaire residents are getting a $34 break on their monthly hydro bill thanks to the temporary end of time-of-use billing. The federal government has provided $250 million for businesses that showed no income last year. Canadian seniors will get an extra $500 regardless of their income so long as they meet rigorous eligibility standards like being a Canadian citizen, being over 65 years of age, or having lived in Canada for at least 10 years. Every single Ontario public-sector employee is getting 100 per cent of their wages and benefits, even if their work has dried up or their department has become temporarily obsolete.
When President Franklin D. Roosevelt created the Civilian Conservation Corps in 1929 as part of the New Deal, he gave 3 million American men between 18 and 25 years of age $30 a month — the catch being that they had to work for it. Those government-funded workers planted some 3 billion trees and dug irrigation ditches for 4 million acres of farmland. By contrast, today’s recession caused the unemployed to get $2,000 a month to sit in overcrowded parks.
It is not to say this money is unappreciated. Surely, there are many individuals, rich and poor, that have faced a massive change in circumstances that necessitate some funding. When policy makers set out to design these programs, they thought the pandemic would last weeks, not months. They were urged to favour speed over effectiveness or limitations. A fair approach then, but now it is time to reconsider. The province must re-evaluate its 100-per-cent assistance for provincial employees and it should ensure new provincial assistance programs come with a clear provincial benefit.
When it comes to non-recoverable financial assistance, the province has managed to keep its powder largely dry, spending several billion on tax deferrals but little on direct financial aid. As everyone from municipalities to commercial tenants comes knocking on the premier’s door for money, the government can rightly evaluate each ask on a case-by-case basis using a simple criteria: why do you deserve money and what do we get out of it?
When the auto companies got a multi-billion-dollar bailout from Canada’s governments in the 2008-09 recession, the government got equity in the businesses and say over the board structure and executive compensation. Today, Canada’s governments are spending hundreds of billions more than in 2008-09 and getting nothing more than a “thank you” in return.
In some cases, the first half of the evaluation will be easy. Ontario Lottery and Gaming (OLG) gets a $500-million loan from the province because it has a reliable business model and can easily pay the money back once the pandemic ceases. But what does the government get in return? Buy-in for its online gaming approach, a guarantee the new CEO will be paid demonstrably less, or even just a review of non-critical expenses? Nope. Nothing.
In the municipal space, for example, the Institute on Municipal Finance and Governance is arguing that Toronto needs more autonomy and former finance minister Janet Ecker is openly musing about a renewed “who does what discussion” with Ontario’s municipalities and the provincial government. With some form of assistance inevitably coming from the province it is crucial that the provincial government get something in return from its municipal counterparts.
That return could be physical assets, clarified responsibilities and expectations, expedited approvals and full buy-in on development plays like its subway focused transportation plan, or it could even be public political praise. Whatever the price tag, it will cause noise from stakeholders and municipal politicians who feel they are being taken advantage of in a time of need.
For a premier who has just recently become popular for the first time, with his approval rate rising by 23 points and his disapproval rate dropping by 36 points in just three months, hearing the voice of criticism may be enough to compel the premier to give away assistance for free. The government may need to choose its fights, but it should take this opportunity to fight for something.
Even though most Ontarians have not experienced it yet this pandemic, Woody Guthrie was right: nothing in this world is free. The jolly banker will come calling. Normally though, when he finally does arrive, he doesn’t rely on the approval of his debtors to keep his job.
— Mitchell Davidson