Ontario balances first budget since the recession

TORONTO—In a relentless uphill march from the depths of the 2008 recession the Liberal government has finally grasped that Holy Grail of fiscal governance—the balanced budget. Although somewhere along the route the premier’s popularity (and Liberal re-election prospects) has plummeted in a parallel decline.

The 2017-18 provincial budget is being viewed in many quarters as an attempted Hail Mary pass to turn those numbers around in time for the 2018 provincial election. In the past eight years, the provincial deficit has grown by an accumulated $90 billion, and although the flow of red ink onto the provincial books has apparently been stemmed, there is little sign of a commitment to paying down the $332.4 billion total debt in the near term.

But the next three budgets are projected to be balanced and the Liberals appear to be looking to their federal counterpart’s playbook of eating the NDP’s lunch with an increasingly progressive slant to spending priorities, riding the rising revenues of a robustly rebounding economy to pay for that lunch.

The centrepiece of this year’s budget is a pharmacare plan that will see four million children up to age 24 covered for prescription drugs. It is a plan that pulls a page from the NDP, whose competing plan was universal, but limited to 127 of the most commonly prescribed drugs.

“The newly proposed Ontario youth drug program is an important step towards delivering much needed care for children and families living with asthma. We hope this new program will continue the broader discussion for the need for universal access to medicines in this country, so that all Canadians have access to the medication they need,” said Vanessa Foran, president and CEO of the Asthma Society of Canada in a release. “No Canadian should have to sacrifice their health because of an inability to afford their prescribed medications.”

Sin taxes are always a popular target when it comes to revenue, and with this budget tobacco tax rates will climb by $10 per carton over the next three years, beginning with immediate hike of $2 that came into effect at midnight Friday, April 27.

Education is another focal point in the budget. In a move that will prove popular with elementary school teachers, full-day Kindergarten classes will be capped at 30 by 2017-18 and then lowered to 29 by 2018-19.

Post secondary school graduates will catch a break, as they will begin repaying their loans after they start earning $35,000 a year, that’s up from $25,000.

The province is announcing two new hospitals in Windsor and Niagara, as well as renovations to Hamilton and Mississauga facilities.

The controversial abortion pill Mifegymiso will now be publicly funded.

As a nod to the challenges being faced by municipalities, the province is giving municipalities the ability to bring in a hotel tax in their jurisdictions.

Seniors, at least those living in urban centres, are also on the books in this budget, with the Ontario Seniors’ Public Transit Tax Credit. Starting on July 1, all Ontarians aged 65 and over will be eligible for a refundable benefit of 15 percent, for an average annual benefit of $130. And in a nod to the ongoing affordable housing crisis in Toronto, the province will allocate some of its unused lands, estimated at being worth between $75 million and $100 million, for the development of 2,000 new housing units in Ontario’s largest city.

With youth unemployment proving to be an ongoing stubborn problem, a new pledge of $190 million over three years for the Career Kick-Start program has been put in the books. Under this program, high school and post-secondary students can access co-op programs and other training to better prepare their prospects in the workforce.

There were also a number of items included in the budget that had been previously announced, including a pledge to open 100,000 new child-care spaces, with a quarter of those spots set to open as soon as this year. 

Rent controls will be extended to all rental units in Ontario, in addition to other measures aimed at helping protect tenants and keep costs affordable.

In an effort to slow down an overheated housing market, there is a new foreign buyers tax, a 15 percent Non-Resident Speculation Tax (NRST) that the Liberals hope will make housing more affordable and a pilot project aimed at studying the efficacy of a basic income, with pilots in Hamilton, Lindsay and Thunder Bay.

First Nations education also received a boost in this year’s budget eliciting some praise from the leadership. Ontario is investing nearly $222 million over three years, followed by sustained funding of $104.5 million annually. “While this is focused on Northern First Nations where health circumstances of First Nations peoples are often critical,” notes a release from the Ontario Regional Chief’s office, “this commitment also includes investments in indigenous health care across Ontario in home and community care, primary care, diabetes prevention and management both on and off-reserve.”

“First Nation leaders and community education professionals requested greater funding to further support indigenous-led institutions and the Ontario government listened,” said Ontario Regional Chief Isadore Day in the release responding to the budget. “The Province of Ontario is following through on its commitment to a renewed government-to-government relationship by signalling their investment in First Nation education. Funds must flow this coming year in order to elevate our communities to the same standards enjoyed by all Ontarians, where all families matter most. Today’s Ontario Budget focused on building a stronger, healthier Ontario and finally included long-awaited commitments, such as sustained funding to address health inequities and improve access to culturally appropriate health services over the long term, particularly in the North where the gaps are more evident.”

The response from the opposition has not been positive.

“For 14 years this Liberal government has made life harder,” said Progressive Conservative leader Patrick Brown in a release following the budget. “Today’s budget is more proof that Ontario families will continue to pay more and get less.” Mr. Brown had prefaced the arrival of the budget by asserting that only by fiscal legerdemain could the budget appear to be balanced. He continued in that vein following its release. “This is not a balanced budget,” he said. “The government is hiding a more than $5 billion operational deficit through cash grabs, unauthorized pension assets and one-time and unusual revenue. The Wynne Liberals are cooking the books a year before the next election.”

“What’s clear from this budget is that Ontarians waiting for a $15 minimum wage will have to wait for a change in government,” said NDP Leader Andrea Horwath. “The 85 percent of Ontarians that want a public hydro system and reform that will get their bills down and keep them down–they’ll have to wait for a change in government. And the vast majority of the 2.2 million Ontarians without a drug plan won’t get the help they need until after the election.”

Reaction across the wider range has been mixed, with the construction associations positive. “This year’s budget continues to provide the people of Ontario with steady investments in public infrastructure to keep our economy moving,” said Patrick Dillon, business manager of the Provincial Building and Construction Trades Council of Ontario. “The government’s commitments to invest $156 billion over the next decade, supporting an average of 125,000 jobs per year to build and replenish our highways, transit systems, schools and hospitals sends a very strong signal to the construction industry and to those willing to enter it, that lots of work lies ahead. With investments like these, Ontario is committed to creating jobs for the future, and it’s those jobs which give the construction industry confidence that we can train the future workforce.”

Some unions were not as upbeat. “Life is harder for most Ontarians after 14 years of Liberal government and now they have balanced the budget by selling off shares in Hydro One that will hurt us all more in the long-run and reduce government revenue for future budgets,” said CUPE Ontario President Fred Hahn in a release. “They keep saying that Ontario is going through an economic boom. A boom for who? Outside of the Queen’s Park bubble workers’ real wages continue to decline, Ontario has the highest rate of student debt and good paying full-time jobs are disappearing while corporate executives keep lining their pockets,” said Mr. Hahn. “This is the legacy of the past fourteen years of Liberal government, and this budget does nothing to help reverse this growing trend.”

Finance Minister Charles Sousa disagreed in introducing his budget. “I want to take a moment to look back at how far we have come,” he said. “Because the road to balance has not been easy. Our government balanced three consecutive budgets before the global recession, before financial markets melted down in 2008. After that fateful year, Mr. Speaker, we had critical choices to make. We could do what some suggested: cut expenses, cut vital programs and services that people depended on, to eliminate the deficit. Or take a more principled and thoughtful approach. To make strategic investments and stimulate economic growth.

“So we chose to invest in our people. Invest in our economy. Invest in Ontario’s recovery.

“So that Ontario families could get through the recession and make it out the other side without losing their homes. So that Ontario’s kids could continue to get a great education and prepare for their future. And so that our moms and dads and grandparents could see a doctor, and get well quickly. Mr. Speaker, for our government, there was no question Ontario families mattered most.”