Shovel-ready or not, where are the stimulus jobs?

By MPP Toby Barrett

As I prepare to travel on another round of pre-budget deliberations with the Finance Committee, it is important to evaluate the stimulus, or ‘shovel-ready’, spending that has recently flowed. The most important measure of success, in my view, is job creation.

It was the 2009 budget that saw McGuinty announce more than $32 billion in stimulus spending.

According to Jim McCarter’s December Auditor General’s report, the McGuinty Government presided over the creation of only 7,000 jobs in the first year of stimulus funding. This at a time when we’ve seen a staggering expansion of the public sector – eight times as fast as the private-sector.

As McCarter stated: “According to the job-creation model used by the Ministry of Energy and Infrastructure, the three programs we examined would create and preserve about 44,000 jobs (each job was defined as one person-year of employment). But, given the lower level of actual spending during the first year of the programs, only about 7,000 jobs were esti mated to have been created or preserved during the first year of the two-year program.”

One problem – tight deadlines for distributing funds meant the time allotted for review was in most cases just one to two days. In one instance, the Auditor General noted that a key component of the provincial review for 56 projects, worth an estimated $585 million, was carried out in just four hours.

Tight deadlines can be expensive. It cost one recipient $620,000 extra to move the completion date for a new $13-million recreational facility up two months to meet the March 31, 2011 target. One municipality had to add incentive clauses ranging from $50,000 to $100,000 to five projects to try and advance their completion dates.

As well, there was no limit on the number of applica tions that municipalities with populations of more than 100,000 could submit. This provided an incentive to submit large numbers of applications in hopes of getting as many of them approved as possible. For example, four municipalities submitted a total of almost 1,100 applications, accounting for 40 per cent of the applications submitted by the 421 Ontario municipalities for this program.

Applicants were not required to prioritize their infrastructure needs, and none did, making it more difficult to assess the benefits of proposed projects and make informed decisions. One municipality submitted 150 applications val­ued at $408 million, and received approvals for 15 projects worth $194 million. It is important to set priorities and it begs the question: why are taxpayers funding projects that previously did not make the cut – that were not deemed worthy of funding before?

With respect to this process, Auditor General McCarter noted there was general lack of documentation to support the decisions regarding which projects got approved, and which did not. In some cases, ministers’ offices approved projects that civil servants had earlier deemed ineli gible or about which they had flagged concerns. Without such documentation, there is a risk that the Ministry would be unable to demonstrate that the awarding of projects was open, fair, and transpar ent, or that political considerations did not come into play.

I also continue to ask where are the resulting shovel-ready jobs to justify the various municipal, provincial/state and federal projects?

The early results indicate that today’s ‘shovel-ready’ may lead to short-term work accomplished, but there is little evidence that stimulus funding creates much in the way of either long-term, or even short-term, employment.