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A. Government Issues
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A.1 Government Issues
The following major government issues are influencing strategic planning and implementation.
Economic and Political Challenges
The outlook for global growth has deteriorated materially in recent months. Global growth is
expected to be 2.5 percent in 2012, before rebounding to 3.3 percent in 2013. The European
sovereign debt crisis remains the dominant risk to the global outlook. If European leaders and
the European Central Bank do not act effectively to contain it, the crisis could very well unleash
a financial chain reaction that would rapidly spread globally. The final outcome could be as bad,
if not worse, than late 2008. This outcome is inevitable unless euro-zone leaders persist with
bold and decisive action. If Europe sets off a global financial crisis, there will be virtually no
fiscal room across advanced economies to buffer the impact of such an outcome, and monetary
policy is largely a spent force.
Adding to the precarious nature of the global environment, the Provincial and Federal
Governments have significant deficits to address. Rating agencies are watching closely and
insisting that clear and meaningful action be taken to reduce spending so that the province’s
credit is not downgraded further - which would trigger increased borrowing costs.
Recognizing their inability to maneuver, the Federal and Provincial Governments have strongly
indicated in their respective Budget proposals that the province and indeed the nation will be
entering a period of austerity lasting several years. In an effort to balance its books within five
years, the Provincial Government proposed little in the way of new funding. Should the Budget
be enacted, operating fund cuts are to be expected in all Ministry and transfer payment areas
with the exception of education and healthcare. Wage freezes for key professional groups
including doctors, teachers and bureaucrats are described as key to finding the Provincial
Government a further $6 billion over three years. To eliminate its deficit by 2015 (an election
year), the Federal Government will focus upon cutting 19,200 public service jobs over three
years, increasing public pension contributions and increasing the age of eligibility for Old Age
Security.
Beyond the Ontario Budget, the Provincial Government will be basing much of its short- to midterm
plans on the advice of the Drummond Commission - related to the Reform of Ontario’s
public services. Save for Drummond’s recommendation to delay full-day kindergarten, each of
the remaining 362 recommendations remain under active consideration by Government. While
Ontario’s colleges do not support all of the recommendations, they do feel the report carefully
balances the need to address the provincial deficit with the longer-term goal to increase the
post-secondary attainment rate in Ontario to at least 70 percent. Areas of clear support include:
creation of a comprehensive, enforceable credit recognition system; transferring functions
related to the administration of apprentice classroom training to colleges; more strategic and
efficient management of scarce research funds; prioritization of deferred maintenance;
leveraging existing collective purchasing capacity; and devolution of federal immigrant training
programs to the province with an appropriate funding mechanism. Areas where colleges remain
significantly at odds with the Drummond Report include: a recommendation for a “rational and
strategic division of roles between the college and university systems”; a recommendation that
colleges not be granted any new degree programs; and delaying new program approvals until a
new mandate agreement process is completed between Government and colleges. Collectively
the first two areas are viewed by the colleges as not reflecting the fact that the student
experience is no longer a straight line from high school to post-secondary credential completion.