Don Drummond’s disturbing report on Ontario’s shaky economy should be seen as the two-tonne elephant that just wandered into the room.

Drummond’s just released report explicitly spells out something no one in Ontario has wanted to talk about — nor are we keen to talk about it now. However, the report will make ignoring the true state of Ontario’s economy a lot more difficult.

The economic engine of Canada has moved west, thanks mainly to the end of the era of the cheap Canadian dollar. With Ontario no longer able to outpace the national economy, Canada’s most populous province won’t be able to offer the services its residents have grown accustomed to.

This is probably why reaction to the Drummond has been, to say the least, muted. The governing provincial Liberals say the Drummond report represents a worst-case scenario. The New Democratic Party has reached into its boilerplate rhetoric to pronounce that Ontario really needs a more balanced approach to fiscal reform rather than Drummond’s draconian measures — whatever that means.

As for the provincial Conservatives, party leader Tim Hudak seems to think the Drummond report supports his demand for a public-sector wage freeze. In reality, the Drummond report has concluded that Ontario has one of the lowest-cost provincial governments in the country. The report also reveals that wage freezes don’t work.

It is clear nobody wants full exposure to Drummond’s recommendations and findings. And, in Hudak’s case, it is even too scary to read.

But as scary as Drummond’s report may be, Ontario’s Liberals stand to gain politically from it. Whatever restraint the Liberals do decide to impose on Ontario, it won’t look as scary as most people perceive the Drummond report to be.

As long as Premier Dalton McGuinty doesn’t appear to embrace too much of Drummond’s report, its aftermath will remain a political asset. He can give voters the choice between Draconian Lite and the Full Draconian.

You can be sure the federal Conservatives in Ottawa will be watching how this plays out. It is interesting that federal Finance Minister Jim Flaherty, usually not shy about taking potshots at Ontario’s Liberals, has been silent on Drummond.

It often has been said that had former Reform Party leader Preston Manning not been in the House of Commons when then Finance Minister Paul Martin addressed the federal deficit, the Liberals would have had to invent him: no matter what Martin said about fiscal restraint, Manning was perceived as being more strident.

As a result, in 1995, the Liberals were able to sell the most fiscally conservative and draconian budget this country has ever seen and still enjoy a bump in public support.

In fact, the federal Conservatives may soon wish they had hired Drummond to go through Ottawa’s expenditures and services and come up with a report. Instead, the prime minister briefly raised the spectre of cuts to old-age pensions in a trial balloon and then backed off — at least, for now.

Instead of asking a credible third party such as Drummond to examine how the civil service can be made cost-effective, Ottawa is imposing unilateral cuts of 10% or more across the board. As several past federal auditor generals have noted, arbitrary cuts like that don’t work because they encourage departments to pad their budgets in anticipation. In addition, across-the-board cuts treat efficient and inefficient departments the same.

In addition, the federal cuts are being presided over by a Treasury Board president who has been tainted by dubious spending in his own riding. Tony Clement will be dogged by his G8 spending spree for the rest of his career.

Look for a change in script if the Drummond report appears to be shielding the Ontario Liberals from public wrath.

On another note, anyone interested in a political career should view Vic Toews’ current difficulties as a case study of how a cabinet minister’s decline begins. First, Toews made an outrageous — and stupid — statement in the House of Commons about either siding with his Internet surveillance bill or with child pornographers. Then, he was forced to acknowledge in a CBC Radio interview that he didn’t fully know what was in his own bill.

In other words, the minister hadn’t read all his briefing notes — something the prime minister isn’t likely to forget. IE