Kathleen Wynne recently started road-testing the messaging around the Ontario budget, which she likes to call 'aspirational.' Budget highlights
The deficit is expected to rise to $12.5 billion next year from $11.3 billion in 2013-14, before falling to $8.9 billion in 2015-16. The Liberals say they still plan to balance the books by 2017-18. Revenues are down almost $1.2 billion from the budget projections for 2013-14 to an estimated $115.6 billion. Program spending will grow next year by almost $3 billion. Net debt ballooned to $269.2 billion for the year ending March 31 from $252.1 billion the previous year, leaving a debt-to-GDP ratio of 38.9 per cent, which is expected to grow to 40.3 per cent next year. A new Ontario Retirement Pension Plan for people without a workplace pension will require contributions from employers and workers of 1.9 per cent of salary. Someone earning $70.000 a year would pay $1,263 into the pension plan and their employer would match that amount. The new plan would be introduced in 2017. There will be a new tax rate of 12.16 per cent on income between $150,000 and $220,000. The 13.16 per cent tax rate for incomes above $514,000 will now apply to incomes above $220,000. $29 billion over 10 years for public transit, roads, bridges and infrastructure. $11.4 billion over 10 years for hospital expansion and redevelopment projects. $11 billion over 10 years to repair, upgrade and build new elementary and high schools. $2.5 billion over 10 years for a new jobs fund which would give grants to corporations. $1 billion to help build a road to the remote Ring of Fire mineral deposit in northern Ontario, but the money is contingent on getting matching funds from the federal government. $810 million over three years for community supports for adults with developmental disabilities. $294 million for a program that helps prevent homelessness. $32 million to expand school breakfast and lunch programs. Increasing social assistance rates by one per cent for people on disability supports and welfare. Replace the Northern Allowance for people on social assistance with a Remote Communities Allowance adding $50 a month for the first person and $25 a month for each additional family member. Hiking the provincial tax on aviation fuel by four cents a litre over four years. Increasing the tobacco tax from 12.35 cents a cigarette to 13.975 cents or $3.25 on a carton of 200, but the tax rate on cigars remains unchanged at 56.6 per cent.
It is certainly that. Also: hopeful, fanciful and unfathomable.
Budget 2014, tabled in the legislature by Finance Minister Charles Sousa on Thursday, aspires to keep the Liberal government on its path to a balanced budget in 2017-18 with a series of revenue and expense projections that, should they come to pass given current plans, would border on the miraculous.
The deficit for this fiscal year is now forecast at $12.5-billion, a jump of $2.4-billion from the amount predicted in the 2013 Budget, and the 2015-16 deficit figure is now $8.9-billion, up from the $7.2-billion forecast just last year. That's two consecutive years where the Liberals expect to significantly miss their deficit targets, adding extra billions onto the debt - and yet the deficit remains scheduled to evaporate over the two years following. It would, the budget says, drop to $5.3-billion in 2016-17 and then be eliminated entirely by 2017-18.
For some perspective on the likelihood of that happening, consider that the actual Ontario deficit in 2010-11 was $14-billion. Based on this year's figures, the annual deficit has now been reduced by $1.5-billion in total over the four years since, or by less than $400-million per year. But for the two years beginning in 2016-17, it will have to drop at more than ten times that rate: almost $4.5-billion per year. This would be a remarkable feat on its own, but all the more so because Ms. Wynne has shown no appetite for the type of harsh austerity measures that would be required to reduce spending by that amount in that time frame.
How, specifically, would the government achieve those out-year targets? Hard to say. The Liberals say there is no money for additional public-sector compensation, but the budget vows to 'respect the collective bargaining process' in upcoming talks with major unions - a sharp departure from the last McGuinty budget that vowed to legislate wage freezes on public-sector workers. Yes, there is talk of 'asset optimization' and 'revenue integrity' and other such buzzwords, but this is a budget that expects annual interest payments on government debt to climb by $4-billion between now and 2017. Despite that considerable additional cost, the government says it will still achieve balance thanks to total program spending that will be at 2014 levels - $119.4-billion - in 2017. Such cost containment would be nothing short of heroic. (The government also projects a sharp jump in revenues beginning in 2016, which isn't really a surprise since every government thinks it will make a lot more money years from now than it does today.)
Because these numbers don't stand up to any sort of scrutiny, this is a budget that attempts to distract from them. It is built around two major items, a provincial pension plan and a transit-funding initiative, that the Liberals hope will be enough to change the conversation away from the fact that their steady-hand-on-the-tiller deficit-reduction plan has now crashed on the shoals. Meanwhile, the Liberals would like you to know that any complaints about their fiscal management should be directed to those cold-hearted federal Tories. The 2014 Budget includes an entire chapter called 'Federal Underfunding of Ontarians,' and Mr. Sousa missed no opportunity on Thursday to whinge about the poor treatment of the province at the hands of Ottawa.
Meanwhile, the proposed pension plan, which would be mandatory for anyone without a 'comparable' workplace pension, will place new costs on employers regardless of their profitability, while the transit proposal, which Ms. Wynne once insisted would be funded by essential new revenue tools, instead mostly relies on the repurposing of existing revenues - and has a $10-billion hole that would be filled with as-yet-unpromised federal contributions and more than $7-billion in possible new debt. To be clear: that's new debt that hasn't even been factored in yet to the almost $300-billion in debt the government has already amassed.
Where once Ms. Wynne was insistent that she would take on the tough sell of new taxes for transit, the budget instead puts all the burden on those with high incomes - defined as people earning more than $150,000 annually - as well as smokers, air travellers, and large corporations that will no longer qualify for certain tax credits. Even here, though, the government's math is highly fuzzy. The budget predicts $635-million in new revenues from personal income tax changes that raise rates by one percentage point for the top-earning 2% of filers. Finance officials confirmed, however, that the revenue estimation assumes zero response from the affected taxpayers. This is completely at odds with research on the subject that says new taxes on high-income earners typically generate about half the expected revenue because those taxpayers take measures to avoid paying the higher rates. Right there, that's an annual shortfall of more than $300-million from what the government has booked, before it has even begun collecting the new taxes.
Of course, none of this matters if both opposition parties at Queen's Park choose to vote against the budget plan and send the province into an election. PC leader Tim Hudak, to the surprise of no one, said his party will vote against it. NDP leader Andrea Horwath, to the surprise of everyone, didn't attend the budget proceedings on Thursday and said she would render her verdict on Friday morning.
This is a budget that was entirely designed to secure Ms. Horwath's support. She shouldn't have a hard time finding reasons to reject it. National Post
Post By http://fullcomment.nationalpost.com/2014/05/01/scott-stinson-like-kathleen-wynne-says-the-ontario-budget-sure-is-aspirational-also-hopeful-fanciful-and-unfathomable/
0 comments Blogger 0 Facebook
Post a Comment