Provincial budget follows on heels of the feds

TORONTO—Faced with a stubbornly burgeoning deficit, the Ontario government released a $131.9 billion provincial budget hot on the heels of the nominally balanced federal government in which the provincial deficit is projected to decline to $8.5 billion this year, $4.8 billion in 2016 and be eliminated entirely just in time for the October 2018 provincial election.

The provincial budget, like its federal counterpart, is raiding the larder to meet its obligations, but while the feds are sacking contingency funds and raiding the Employment Insurance kitty, the Liberal government of Premier Kathleen Wynne plans to sell a portion of Hydro One in order to “re-invest” those funds in the province’s badly battered infrastructure.

“Mr. Speaker, our government’s plan to create jobs and growth has four major components. We will build modern infrastructure,” said Ontario Finance Minister George Sousa in delivering his budget speech. “We will support skills training. We will help create a more innovative and dynamic business climate. And we will provide income security in retirement. Mr. Speaker, this is a plan that will not only create a more competitive economy, but also help build a fair society, with strong health care, and the tools to break the cycle of poverty and support people with disabilities. We will continue to move forward with our comprehensive path to balance the budget by 2017–18.”

Under the budget introduced in the legislature on Thursday, April 23, the province will be implementing a 10-year $130-billion infrastructure plan, a plan that includes $49.8 billion for transit, highways and bridges in the Greater Toronto and Hamilton Area. The largest infrastructure investment to take place in Canada “since the driving of the last spike,” according to the finance minister. That investment will not only boost the provincial economy over the short term, noted the minister, but will also lay the foundation for future prosperity and job growth.

Beer drinkers got some good news, bad news in this budget. Beer will be soon sold in 450 of Ontario’s 1,500 supermarkets, six-packs are expected to be spotted in grocery stores by this Christmas. On the other hand, a new three cents a litre beer tax will be applied on those suds this November, to increase three cents per litre each year until 2018. This works out to the equivalent of a penny per bottle or $1 a two-four annually. Small change that it is anticipated to bring in $100 million by 2018.

The budget confirms the already announced plan to sell off up to 60 percent of Hydro One, the provincial utility that owns 97 percent of Ontario’s transmission lines. That sale is expected to net $4 billion, money that will be earmarked for transit.

The Ontario Progressive Conservative (PC) official opposition characterized the budget as “short term gain for long term pain” and a “shell game.”

“Today, the government is crowing about their spending on infrastructure.  Well, the $130 billion on infrastructure spending is the same as last year. There’s no new money announced. But last year, they said only $3.1 billion in asset sales would be needed to achieve that, and the remainder would be covered through general revenues,” said Vic Fedeli, PC finance critic. “Now, the government is saying they have to sell significant assets to pay for it. They’re taking what they previously announced and are using it to lower the deficit. This is the shell game they’re playing. It’s time this government stops using its credit card and starts using its debit card.”

The combination of Hydro One asset sales and the beer in grocery store items led Algoma-Manitoulin MPP Mike Mantha to quip, “you may be able to buy your beer in a grocery store, but you will not be able to afford the energy to keep it cold once you get it home.”

In a nod to the stubbornly high rate of youth employment in the province, the budget announced that the government will be “investing $250 million over two years in a new youth jobs strategy.” The news isn’t all sunshine and roses, however, although the Ontario Student Assistance Program, which defrays college and university tuition fees, will be adjusted to inflation this fall, there will be a more aggressive push to recover defaulted loans.

Aside from the infrastructure and youth, there wasn’t much else in the way of increased government spending. The budget announced that the province will be cutting 5.5 percent of all program expenditures except health-care and education (the two largest areas of spending, health spending will increase 1.9 percent, while education spending is slated to rise two percent), except for post-secondary funding, which will remain frozen.

On a bright side for the snowbound North, motorists who use snow tires will get a discount on their car insurance rates and the government will prevent premiums from going up for those involved in minor fender benders.

The province announced that the government will be conducting a comprehensive review of all user fees, including driver’s licences and hazardous waste levies, to an eye to moving to full-cost recovery in those areas.

In a move to address advertising criticism that has also been aimed at utilizing taxpayer money for partisan purposes, the government will be streamlining the process for government advertising to define more clearly what is partisan. The move comes after the auditor general rejected advertisements because they contained political party colours.

The province will also be reinstituting the connecting link program that had been rolled into the general municipal infrastructure fund. But local municipal politicians were cautious in their response.

“It sounds good,” said Northeast Town Mayor Al MacNevin, but he pointed out that his municipality had applied for connecting link funding a number of times under the previous connecting link program without success. “I will wait to see the details before I start celebrating.”

“I am certainly not happy with the deficit continuing to go up,” said Central Manitoulin Mayor Richard Stephens. “But the theory is that we need infrastructure. I will wait until I see the details. Right now you don’t have the story, you just have the headlines.”

Much of the Ontario budget is unabashedly aimed at the heavily populated urban centres of southern Ontario. “Gridlock costs our economy up to $11 billion per year in the GTHA alone,” noted Minister Sousa. “Government after government has delayed investing in infrastructure. We can’t afford any more delays.” Mr. Sousa projected that the decade-long effort contained in his budget should create 110,000 jobs.

Other southern Ontario focussed items include previously announced improvements to GO Transit and TTC services, a new Hurontario LRT that will link Mississauga and Brampton, extending Hwy 407 from Brock Road in Pickering to Oshawa’s Harmony Road (slated to open later this year) and one-third of the funding for Toronto Mayor John’s SmartTrack surface rail system.

In a provision that has plenty of implications for the North, the budget includes proposals intended to reduce provincial land tax (PLT) inequities beginning in 2015, as the first stage in reforming the PLT system. The PLT is the property tax paid in unincorporated areas of Northern Ontario outside municipal boundaries. The government had announced a review of the PLT in 2013 to address concerns raised by Northern municipalities regarding inequities between their property tax rates and the PLT. Unincorporated regions generally enjoy much lower PLT rates than the mill rate in neighbouring municipalities, leaving those municipalities to supply services without a corresponding levy to support those services.