Ontario budget assists low income seniors, students while higher earners will pay more

Everyone taxed on carbon consumption to lower greenhouse gas

TORONTO—Ontario’s 2016 budget has hit the newsstands in a flurry of spin and counter spin, with the most common headline featuring news that some students in Ontario will be receiving what amounts to free post-secondary tuition—but the bottom line of this budget remains written in red, albeit in a lighter shade.

The 346-page budget contains nearly $134 billion in spending, but lays out the government’s planned route to an elimination of the $5.7 billion provincial deficit by the end of March 2018.

The deficit for the 2015 year ending March 31 fell to $5.7 billion (from an previously anticipated more than $8 billion) and by 2017 the deficit is expected to drop to $4.3 billion, reaching balance in 2018. But deficit reduction along that charted path calls for new revenues, cutting costs and continued economic growth. A sudden downturn could disrupt the Liberals best-laid plans. On a bright note, projections by Mike Moffat, chief economist at the Mowat Centre, heard by delegates to the annual ROMA/OGRA combined conference in Toronto last week was surprisingly upbeat—the first such positive report in several years.

Algoma-Manitoulin MPP Mike Mantha was highly critical of the budget, noting that seniors will be paying more for prescription drugs, the cost of gas and heating will rise under the cap and trade program (although the NDP have supported cap and trade, they do not approve of the Liberal implementation plan as it lacks protections for consumers and provides exemptions for corporate polluters).

He pointed out that the budget fails to address key shortfalls in health care and education spending, while at the same time tacking on new cuts. “Seniors will see their drug costs nearly double with this budget,” agreed NDP Leader Andrea Horwath in her remarks about the budget. “Patients will continue to wait too long for surgeries. Students across the province will continue to suffer cuts to their education.”

Mr. Mantha asserted that the provincial Liberals could have built on Ontario’s potential with this budget, but they had clearly missed the mark.

Even as it brings the overall numbers into balance, the Liberals are slated to add $30 billion in debt to the government’s deficit tally over the next three years, and by the end of March 2019 that deficit is anticipated to top $326 billion. A cautionary note is that the cost of servicing that debt produces the third-largest single line item in the 2016 budget, only outpaced by health care and public education. The servicing cost is estimated to be $11.8 billion in the 2016/17 fiscal year, moving that item ahead of spending on post-secondary education or welfare.

If it isn’t the sale of Hydro One, cap and trade or the continued deficit that is hitting the headlines, the top contender would likely be the promise of free tuition for students from households with an average annual income that falls below $50,000 and that free tuition will also be available to some students in graduate programs who qualify for the Ontario Student Assistance Program. At least half of students from households earning less than $83,000 a year will also pay no tuition through the combining of grant programs and those from higher income families will either see a reduction in fees or pay the same amount. The government is reworking existing grant programs and claims that the new program will not cost more money.

Ontario companies will soon be trading carbon credits with California and Quebec, as Ontario moves to a cap and trade program within a year. The province asserts that cap and trade will raise $1.9 billion in its first year, and that they well funnel that largesse back into eco-friendly programs—the opposition claims it is a Liberal cash grab. The carbon-pricing effort will have some costs for consumers, including a 4.3 cent hike on the price of gas and heating costs will rise. The cost of electricity is not expected to be impacted by this program.

Higher-income seniors will see their annual deductible for the Ontario Public Drug Program increase to $170 a year from $100 and they will be required to co-pay a dollar more per claim, but for 170,000 low income seniors in the province, the costs will drop substantially. The province promises to overhaul the entire drug program by 2019. Seniors will also be receiving free shingles vaccine.

One other reform is anticipated to allow pharmacists to administer travel vaccines (they’re already allowed to give flu shots).

The Drive Clean program will be getting an overhaul, and drivers will no longer have to pay a $30 fee for a Drive Clean test to ensure vehicles meet emissions standards. The program will continue, despite both the environmental commissioner and the auditor general saying the program is redundant, unfortunate since it will cost the province $60 million a year.

There will be 70 grocery stores allowed to sell wine by this fall, and eventually that number will rise to 300 grocery stores. Small increases to the minimum cost of wine, ciders and fortified wines will see the minimum cost of a 750-millilitre bottle increase to $7.95. The change is expected to raise $15 million in 2016 fiscal year, $45 million in 2017 and $75 million in 2018.

The budget promises cheaper parking for frequent hospital visitors: they will be able to buy cheaper, transferable passes with in-and-out privileges or save 50 percent on multiple-use passes at hospitals that charge more than $10 a day.

On the pension front, the Ontario Retirement Pension Plan will continue to move toward the delayed 2018 rollout, with an escape clause should the federal plan step up enough.

There are plans in the budget to reduce Workplace Safety and Insurance Board (WSIB) payroll premiums by about 40 percent over the next two decades, that is if the fund reaches full funding by 2022.

The province will raise welfare rates slightly, by an increment of 1.5 percent to Ontario Works and Ontario Disability Support Plan rates and increasing the monthly amount for single adults on either of those plans by $25 a month.

The budget promises 80,000 more home-care hours from nurses for the province’s sickest patients to help people age at home or die in their own residence.

As part of a broader strategy to tackle violence against women, the budget also promises $2.4 million a year to help survivors of domestic abuse find new homes.

The province has announced in the budget it will run a pilot program in one community to try out a guaranteed annual income plan that will replace welfare.

The province has pledged $1 million to increase supports for families experiencing the loss of a baby during pregnancy and the province plans to build three rooms to allow for the transplant of stem cells as cancer treatments, one in Toronto, one in Hamilton and one in Ottawa.

The vaccine debate has hit the budget table, with plans to tighten the rules for vaccines in schools that will means it will be harder for parents to send unvaccinated children to school.

Sin taxes are rising, with tobacco taxes jumping $3 per carton, a move to increase smoking cessation that will cause an average pack of 20 cigarettes to go up by at least 30 cents and a large pack of 25 to rise by 38 cents.

Two tax credits will be disappearing. The Healthy Home Renovations Tax Credit, intended to help seniors modify their homes to make it easier to age in place, is being cut due to low subscription (those that did buy in were predominantly the more wealthy) and will save $15 million a year. The Children’s Activity Tax Credit, which also seemed to only benefit wealthier families, is also going the way of the dodo, saving $55 million a year.

We will have to wait and see what new or increased service fees will appear to increase revenues, including those for drivers’ licences, as the budget says they are coming, but not by how much. The province’s modernize of ServiceOntario will allow more online services, such as changing one’s address on their drivers’ license and health card—likely leading to fewer humans helping humans in centres across the province.

There will also be $5 million over three years to increase education about the treatment of indigenous children in residential schools as was recommended in the Truth and Reconciliation report.

The budget promises $2 million to help the more than 10,000 Syrian refugees that will settle in Ontario to integrate into Canadian society.