Fun With Numbers

February 27, 2010

With all the talk of Toronto’s looming economic apocalypse, I decided to submerse myself in a little policy wonking. I hunkered down with both the Toronto Board of Trade’s early February report, The Growing Chasm: An Analysis and Forecast of the City of Toronto’s Finances and a CUPE commissioned paper from economist Hugh Mackenzie entitled, Reality Check: Toronto’s Budget Crunch in Perspective. Two opposing points of view; two tales of two cities.

Now, I am no economic whiz. Numbers, pie charts, graphs and stats tend to make me break out into a cold sweat. Like most of us, I can be baffle-gabbed and hoodwinked when set upon by numerical waves. So in no way should this be taken as a valid economic assessment of these reports. Rather, what blinks before you is a general overview of my impression of them.

Firstly and not surprisingly, the conclusions drawn in both papers reflect the opinions and standpoints held by those who contracted, as it were, the reports. As to be expected, I guess. Still it feels a little, how shall I say, unscientific. But that just may be the nature of the beast when it comes to the field of economics as a whole.

In the Board of Trade’s The Growing Chasm, there is no mistaking whatsoever how we must not tackle the city’s dire financial situation and burgeoning structural operating budget deficit. Of their report’s 34 pages, two (#s 21 & 22) are delivered in dark highlighted boxes. Within those boxes is an impassioned plea against commercial property tax increases. According to this study done by Canada’s largest chamber of commerce, businesses in the 416 area code already bear an unfair tax burden and cannot be expected to carry anymore of the load. If future city councils were to try this than businesses would have no choice but to pick up their stakes and move to more tax friendly locations in the GTA.

To the Board of Trade the actual culprit for City Hall’s runaway spending and growing structural deficit are the wages and benefits that are doled out to municipal employees. Of course in his report done at the behest of the Toronto Civic Employees Union Local 416 of CUPE, Hugh Mackenzie strongly disagrees with that notion. His numbers suggest that employee wages and benefits are perfectly reasonable and that, in fact, Toronto’s recent increase in operating expenditures is 4% lower than the increases in municipal expenditures throughout the rest of Ontario.

Again, I can’t decipher the numbers thrown around in these reports well enough to be able to ascertain who’s massaging what figures or who’s cherry picking what data but I am confident enough to say that the Board of Trade’s report contains a methodological blemish that makes me, at least, suspicious about the veracity of their report. Early on in the Growing Chasm it is suggested that the city’s structural operating budget deficit has been around “since at least the start of the decade”. Sounds a little vague. Surely something this important, this ominous structural operating budget deficit, can be traced back a little more accurately than simply “Since at least the start of the decade”?

No matter. The report then bases all its assertions on the numbers gleaned from the 2002-2008 period. The end number, 2008, is reasonable as it is the last year for which the statistics are available. But why start at 2002? Why not begin right at amalgamation with the birth of the megacity before the structural operating budget deficit reared its ugly head in order to give us a full and complete view of the city’s finances from day one? 2002 seems an arbitrary snapshot as if the Board of Trade needed just that time frame to prove their point. It’s analogous to someone trying to establish the fact that the ancient Romans were poor builders of edifices by pointing out the shoddy condition of the structures from, say, 1945 to the present day.

Or maybe I’m just missing something. Clearly everyone in the mainstream press and the front running candidates for mayor have hopped on (the Toronto) board of Trade. There is a Growing Chasm. City Hall has taken part in an unsustainable spending spree! Cuts must be made! Assets sold! Taxes frozen!! Anything less and we will be going to hell in a hand basket while businesses flee the downtown core to the more amenable environs of 905.

No question. No doubt. And no paying attention to that man over there, Hugh Mackenzie, telling you otherwise.

studiously submitted by Acaphlegmic