WARNING FOR NON-ONTARIO PEOPLE: BUDGET BUDGET BUDGET

Although this week’s edition does have non-Ontario-related content, the simple truth is that this week’s provincial budget - like all budgets - makes it one of the most important weeks of the year for the province, so there’s going to be a lot of concentration on that this week. There’s other stuff, so if you don’t care about Ontario or budget reporting in general, scroll down until you stop seeing me insult Doug Ford. Which will take a while.

Okay, so: the budget. The thing about government budgets is that they are very, very large and very, very complex, and it is hard to analyze them in any complete sense because they’re so big that nobody can find everything in one go. I mean, journalists only found out about the Crown Liability and Proceedings Act this afternoon - four days after the budget dropped - and it’s so important I’m writing about it in a separate section. So what I am saying here is: whatever I write about the budget right now, consider only a rough executive summary.

So, the bold strokes of the budget are as follows. Firstly, the Ontario government is not going to run a balanced budget this year, or indeed any year during Doug Ford’s first and hopefully only term in office. They project to gradually reduce the deficit over their four budgets but not eliminate it entirely. Granted, this is reliant on a lot of assumptions, one of which is that their budget cuts won’t harm Ontario’s (anemic) economic growth, and another being that Ontario’s economic growth won’t slow further. And… okay, put a pin in this one and let’s come back to it later.

The Ford budget cuts a lot. And when I say a lot, I mean it. The Ministry of Indigenous Affairs is being effectively cut in half and it was already underfunded: First Nations settlements which were depending on provincial money for power installations and running water development are going to go without as a result. The Ministry of the Environment is seeing a 35 percent cut, a lot of which was green development programs to incentivize individual environmental refits and purchases (home insulation installation, green vehicles, that sort of thing). Legal Aid Ontario is getting chopped by 30 percent, most of which will come from a near-total cessation of services for refugees. Community Services is seeing a $1 billion cut - part of which is the already-announced lowered welfare rates and increased clawbacks. $306 million from the Ministry of Labour, which will cripple their ability to enforce employment standards across the province. The Tories’ plan to deal with this is, essentially, to let employers “educate themselves to be self-reliant on understanding their obligations” or, more accurately, “nothing.” A plan to regionalize the province’s public health boards into larger, more centralized units, which goes exactly against those boards’ missions to work closely with the municipalities they serve and likely weaken their ability to inspect food and water quality.

The Ministry of Education has scheduled a spending freeze for next year, which would require them to not give teachers cost-of-living increases (among other things), and given that teachers renegotiate their contracts later this year this seems like a sneak preview of the next huge labour action in the province. On top of that, the teachers are already hugely angry as a result of the already-announced education spending cuts which will result in larger class sizes and lost jobs so they have really no incentive to play nice any more. Why the Tories - who spent a decade-plus in political exile in large part because the province was sick and tired of them constantly going to war with teachers - would start a new slapfight with teachers in their very first budget is beyond me, but then again I don’t belong to a political party with terrible ideas.

And, of course, there are hidden healthcare cuts, by which I mean that the increases to the healthcare budget are not going to even equal the projected rate of inflation - much less population increases - which means the system will have to do more with less, simply because it will have less money overall. For a party that campaigned heavily on ending “hallway healthcare” it’s definitely… sort of a look.

And now let’s go back to that pin from earlier, which is that the Tories’ plan to reduce the deficit is predicated on certain growth assumptions: specifically, 3.4% nominal GDP growth in 2019 and 2020, 3.2% in 2021 and 3.6% in 2022. (In fairness to them: these are reasonably conservative projections.) Missing just one percent in any of those years would mean an additional budget deficit of $700 million to $1 billion. If the province starts to stagnate - or worse, enters a recession - things will get very, very bad very quickly. Granted, “recessions are bad” is not exactly the most original statement, but we’re already at a point where the province will be eliminating thousands of jobs over the next year, and austerity planning like this has a track record of weakening economic performance, so…

WHEREIN I DO NOT TOTALLY INSULT DOUG FORD’S TRANSIT PLAN, IN THE NAME OF BALANCE

Doug Ford also announced his transit plan for Toronto on Wednesday, and although it is far from perfect, it at least… approaches reason.

Prioritizing the downtown relief line that should be the #1 priority for Toronto transit is the right thing to do, and Ford did that with his “Ontario Line.” Yes, some of the choices for that line are weird - having it start at Eglinton rather than the further-north Sheppard (or Finch, or even Steeles) is definitely contra best planning practices, and having it terminate at Ontario Place instead of looping back into northwest Toronto (as most relief line plans generally prefer) is not entirely ideal and also makes one think that Ford definitely has shifty-ass plans for Ontario Place. (Mostly because he has signalled that already. Go back and look at my January 6th issue.) But, any fair assessment of the proposed line has to be that this is generally… okay. Ontario Place and Don Mills/Eglinton (wherein is the Ontario Science Centre, incidentally) are both underserved by transit given their locations and importance (as is Liberty Village, near Ontario Place, which will get a transit station it badly needed ten years ago) and this line will take away pressure from the Yonge line, which is the point. Plus you can always expand it later.

The rest of Ford’s announcement is much like the Ontario line: not anywhere near the best idea, but something. Expanding the Scarborough subway extension to three stops rather than one is throwing bad money after bad - it’s absurdly expensive and doesn’t deliver as much transit service as other, less expensive options - but it is certainly less useless than the one-stop extension John Tory and his allies foisted on the city. (Yes, Scarborough residents will have to spend years using buses since the line won’t be finished before the current Scarborough RT line ages out of usability, but on the other hand, Scarborough residents by and large voted to support people who promised them expensive, stupid subways instead of a large LRT network we could have finished building two years ago, so congratulations, guys.) Forcing the Eglinton West LRT extension to tunnel underground is just stupid, because Eglinton that far west isn’t a significant enough transit corridor for an LRT line to make a major difference, and it adds a good billion dollars or so of construction cost - but at least now the Eglinton West LRT will reach the airport, which was always the long-term idea anyway and it will finally be executed under this plan. There was no announcement about the Eglinton East LRT line or the Waterfront LRT line - both of which are completely finished re planning and are shovel-ready, and just need funding to get started, and both of which are extremely necessary and relatively cheap, but on the other hand they weren’t funded beforehand so at least it’s not backwards progress. And Ford promising to cover the entire bill if the city and federal government don’t chip in is certainly ballsy.

All of that said, though, I remain skeptical, partially because it is Doug Ford and he is an idiot, partially because he trusts idiots, and partially because so much of this plan, at present, is a bunch of lines drawn on a napkin, and any damn fool - for example, John Tory - can draw lines on a napkin and pretend it’s a plan. Ford promised that the Ontario line, for example, could be built for about $11 billion, but the City of Toronto, for phase one of construction of its planned version of a similar line which was smaller and less ambitious in scope, was budgeting seven billion dollars. That’s seven billion to not even get it close to finished - mostly because the Ontario/relief line has to almost entirely be tunnelled by design and tunnelling is expensive as hell.

Another thing about Ford’s plan is the number of stops. Transit networks are basically defined by where they stop, and other than the beginnings and endings of lines, Ford’s plan mostly doesn’t discuss them - which is a problem because stops are the next most expensive bit of transit construction after tunnels. Is the Ontario line going to be an express line like the Union-Pearson Express or a line with a good number of stops so that it improves local transit ability? This question matters a lot and we have no idea what the answer is. We also don’t know things like “what type of trains they will be using for the Ontario line” which is kind of important: the difference between subways and light rail transit for a project like this is measured in billions of dollars.

And finally, at the end of the day, it’s still Doug Ford, and his word is worthless because he’s a notorious liar. Him saying that he is staking his “personal political name” on it is without meaning, because if things don’t go his way - and remember, we’re talking about him committing to tens of billions of dollars of government spending in Toronto when he’s also cutting everywhere else, which will be massively unpopular everywhere outside of Toronto - he’ll just say he never said that and if there’s video, so what?

ALSO THIS WEEK IN DOUG: IT WILL BE HARDER TO SUE THE GOVERNMENT

Above, I mentioned the Crown Liability and Proceedings Act as being an important thing stuck in the middle of the Ontario budget that people only started reporting on days after the budget was released. That was because it was very purposely sort of shoved in the middle of the budget legislation in the way you do when you don’t want people to notice what you’re doing if at all possible.

What the bill does is limit the ability of people to sue the Ontario government by eliminating the government’s financial liability in all matters where the government is acting on decisions “made in good faith” or where a person is harmed by a government agent “exercising authority.” These qualifications essentially eliminate any lawsuit against the government for, say, gross incompetence, and many that are even negligent or malicious. (My reading of this, for example, is that if an OPP officer uses excessive force on a suspect and cripples them for life, there is at least a legitimate argument to be made that they are “exercising authority” per this bill and therefore the government is not financially liable for that excessive force.)

But that’s not all! The bill doesn’t just give the government a nearly ironclad defense against almost any civil lawsuit (except for suits brought under the Charter of Rights and Freedoms, which the government cannot insulate itself from - but most civil suits aren’t Charter suits) - it also requires a potential plaintiff to prove before a court of law that the province acted in bad faith! But most people will only be able to prove this via court discovery processes during a lawsuit, because most of any proof that the province acted in bad faith will be in provincial records they are under no obligation to disclose! Which means that the province will be almost entirely immune against most civil lawsuits, at a time when they are also dramatically reducing their ability to regulate laws they are obligated to enforce. Which means that, if we get another Walkerton situation (and Doug Ford’s Tories have already scrapped a lot of environmental regulatory law, including some of the post-Walkerton laws that were put in place specifically to prevent future Walkertons, so this is hardly some pie-in-the-sky fantasticism), this time around nobody will be able to sue the government if they end up accidentally killing people.

OKAY NO MORE DOUG HOW ABOUT SOMETHING ABOUT THE NEW WRITER’S STRIKE

Most people who enjoy television and movies have a vague idea of when the writers are on strike: shows and movies go on hiatus, a lot of things get made that aren’t very good, a lot of things that were made three years ago and then put on the shelf because they really weren’t good get released because Hollywood has to show you something, and eventually the studios cave and the writers come back because, in the end, the writers get paid a relative pittance for doing the work that allows Hollywood to exist and make a shit-ton of money, and the suits mostly understand that.

This current legal action by the Writer’s Guild of America that threatens most productions is… not that. It is a different and new thing, and - as always - you should be on the side of the workers.

This time, the dispute is not really between the writers and the studios, but instead it is between the writers and their agents. Not the individual agents: most writers who have been firing their agents as a result of this strike are happy to say “look, my agent is great and I wish I didn’t have to fire him.” It is instead between the writers (represented by the WGA) and the ATA: the Association of Talent Agents. The ATA, in its materials, says it’s a trade group representing over a hundred talent agencies, but corporate consolidation has been a thing in the agency world just like it has been everywhere else and realistically there are four agencies that dominate the agenting business: William Morris Endeavour, ICM Partners, United Talent Agency and Creative Artists Agency (or WME, ICM, UTA and CAA). And for a long time, this consolidation was mostly not a problem, because it just meant the agencies were more efficient at doing their jobs.

(Well, actually, it was kind of a problem, because consolidation of power always leads to abuse of power and there are plenty of stories that weren’t adapted into episodes of Entourage because they would be too grim by half. But anyway.)

What has changed in recent years is that, since these mega-agencies are large and profitable companies, three of them (WME, UTA and CAA) have sold ownership stakes to private equity firms to fund expansion efforts, and the thing about private equity firms is that they want more money all the time, and agenting is, by definition, a business that doesn’t really expand geometrically. One agent can represent a bunch of people, but there’s a finite limit to what they can do, and each of those people give you ten percent of their earnings, so the cap for every agent employed by an agency is ten percent of all the money earned by the people they represent. This is, to be sure, a lot of money, but any scaling is linear: if you want the agency to make more money, you hire more agents who represent more people, and you increase the company’s profits by a reasonable amount. This sort of business performance is not what private equity investors want. Private equity investors want rapid, massive income increases and they want them all the time.

Now, the agencies were already moving into production as well as agenting (ICM owns Just For Laughs, WME owns the UFC and the Miss Universe pageant, et cetera) and that’s an additional profit stream, but that wasn’t enough and besides, producing involves the risk of the thing you’re producing being unsuccessful. What the agencies decided on as a new revenue stream was what are called “packaging fees.” Traditionally, in agenting, the term “packaging” means you get a bunch of your clients all getting paid by the same studio on a single project: your writer writes the script, your director makes the movie, your actors star in it, et cetera, and you get your 10% fee for each of them. But what the agencies decided was: what if we started demanding money from the studios in order to package things, because we are large and powerful and they need us? And they got this via packaging fees. There is an upfront fee (usually three percent of series or movie budget). There is a deferred secondary fee (usually another three percent of the budget, taken out at the end). And there is a final fee, which is a share of all gross profits made from the project. Usually this is ten percent of profits that the agency gets forever, for no good reason other than they can demand it.

It’s classic middleman/rentseeking behaviour: the agents aren’t paying for the movie or TV show to be made and they aren’t doing the work of making it, they’re just demanding a share of money because they’re institutionally powerful and because they can. At the same time as packaging fees have become a greater and greater revenue stream for agencies, writers’ share of income from Hollywood projects has decreased, because of course it has. The agencies don’t need to fight for their clients any more because they can make money, way more of it for less work, on packaging fees.

And this is a legal issue, because the agents have a fiduciary relationship with their clients. They’re legally obligated to fight for their clients’ best interests, and for the writers they are simply not doing it because, well, packaging fees, money, forever revenue streams for private equity partners, et cetera. Which is why the writers have all started firing their agents en masse and informing the studios that if they want to hire them, they can call the writers directly until the agencies negotiate a new agreement with the WGA.

Remember, folks: private equity ruins just about everything.

UNPLEASANT LINK OF THE WEEK

I don’t have anything to add to this Rolling Stone piece on the likely-to-worst-possible outcomes of climate change by 2100. But you should still read it. Especially if you have kids or grandkids in your life that you care about. (Spoiler alert: the worst possible outcome is near-human extinction. Yes. Within the century. And the lesser outcomes are still very, very, very bad.)

Bill McKibben Book ‘Falter’ Details Possibility of Human Extinction - Rolling Stone

Food-system collapse, sea-level rise, disease. In his new book “Falter,” Bill McKibben asks, “Is it Too Late?”

THE ENTERTAINMENT SECTION

Movies watched recently:

Three Days of the Condor (1975, Sydney Pollack, Kanopy) - 4/5

Shazam! (2019, David F. Sandberg, theatre) - 3.5/5

The season premiere of Game of Thrones was also pretty great! No spoilers, don’t worry. I only spoil the less-important stuff like extinction events.

See you in seven.