Mild Forecast

“This will be the last deficit before we erase it completely in 2017-18. We are balancing the budget.”– Finance Minister Charles Sousa.

With this year’s provincial Budget being released in the dead of winter, there was a good chance the weather would be unpleasant. Indeed, there was some rain, snow and wind around Queen’s Park. And given that climate change was a central theme of the Budget, it was fitting that Mother Nature should have her say. But the Budget itself was far from tempestuous.

The title of the Budget is one of gentle reassurance: “Jobs for Today and Tomorrow,” and much of its content aligns with previous economic statements and government announcements.

In these days of pre-Budget pre-empting, one or two surprises are left for the Budget announcement – the items the government clearly wants to be the focus on B-Day. Foremost on today’s not-previously-released agenda is a revamp of student aid, including enhanced grants that will essentially make post-secondary education free for low income families, and much cheaper for middle income earners.

Another happy surprise for consumers is the elimination of the much-unloved $30 Drive Clean emissions test fee, while Sousa also unveiled a 1.5% raise in social assistance rates, $345 million more in hospital funding (including the first increase in base funding in five years) and free shingles vaccines for seniors.

For the most part, though, the Budget reiterates initiatives already announced in recent weeks. These include setting the stage for Ontario to auction carbon allowances next year, as part of a cap-and-trade program to reduce greenhouse gas emissions. (It was the deadline for a legislative framework to implement multi-jurisdictional climate change programs that forced Sousa to deliver the Budget so early this year.)

The other big pillar of today’s Budget was, of course, infrastructure spending – as it was in previous Liberal Budgets and their 2014 election campaign. Those numbers keep getting bigger, now totalling $137 billion over 10 years – $160 billion if you start counting in 2014-15, again touted as “the largest investment in public infrastructure in Ontario’s history.” Sousa also reiterated the additional $300 in infrastructure grants for small communities announced by Premier Kathleen Wynne at a municipal conference earlier this week.

One item that appears to have dropped on the Liberal priority list was the centrepiece of last year’s Budget. Sousa mentions the Ontario Retirement Pension Plan, vowing that it is proceeding. But he acknowledges that with a more cooperative government in Ottawa possibly resulting in changes to the Canada Pension Plan, he hedges his bets by offering that discussions will “look at ways to meet the goals of the ORPP in an enhanced CPP framework, while preserving the ability to implement the ORPP, should that not be possible.”

Finally, the last big piece of Sousa’s optimistic puzzle is balancing the books in 2017-18 – just in time, not coincidentally, for the next election. This projection is based almost entirely on economic growth, with spending increasing in almost every ministry, offset only slightly by the elimination of a handful of tax credits.

Today’s Budget doesn’t quite reach for the “sunny ways” aspiration espoused so successfully by Prime Minister Justin Trudeau. But Sousa and the Liberals are counting on Ontarians just being happy the weather is relatively mild.


Highlights of the 2016-17 Ontario Budget:

Economic Performance

  • Deficit of $5.7 billion for 2015-16, $4.3 billion for 2016-17, balanced budget in 2017-18 and 2018-19.
  • Total revenue of $130.6 billion in 2016-17, versus total spending of $133.9 billion.
  • Economic growth projected at 2.2%.
  • Forecast of 320,000 more jobs by 2019.

Infrastructure

  • $137 billion over 10 years for roads, bridges, public transit, hospitals and schools.
  • o2016-17 infrastructure spending including 5.4 billion for transit projects, $2.1 billion for highways, $2.9 million for hospitals, $2 billion for education and $800 million for post-secondary institutions.
  • Expanding the Ontario Communities Infrastructure Fund to $300 million a year.
  • Generating $5.7 billion from sales of government-owned assets (including Hydro One) – $2.6 billion more than originally projected in the 2014 Budget.

Business and Consumers

  • Implementation of cap-and-trade program, including auctioning of carbon allowances in 2017, incenting companies to be more efficient. Proceeds from the program – up to $1.9 billion annually – will be invested in other emission-reduction programs.
  • Continuing roll-out of the 5-year, $400 million Business Growth Initiative.
  • Elimination of the $30 Drive Clean test fee.
  • Lower hospital parking fees.
  • Sales of wine and cider in grocery stores.
  • Lower fares on the Union-Person Express.
  • Elimination of Child Activity Tax Credit
  • Elimination of Healthy Homes Renovation Tax Credit.
  • Reduction of Ontario Research and Development Tax Credit from 4.5% to 3.5%
  • Reduction of Ontario Innovation Tax credit will from 10% to 8%.
  • Examine ways to simplify the province’s personal income tax system and review the Apprenticeship Training Tax Credit to see if it is actually encouraging businesses to hire apprentices.
  • Launch a targeted consultation process on the sharing economy, including ways to “further enable home-sharing and allow greater flexibility for ride-sharing.”
  • By 2018, online service to renew health cards.
  • $3 price increase for a carton of 200 cigarettes

Education

  • Ending the Ontario Tuition Grant and transforming student aid for post-secondary education into a “simple, integrated, upfront grant” – including making college/university tuition free for students with financial need from low income families, and implementing non-repayable grants for about half of students from families with incomes under $83,000.
  • Increased access to interest-free and low-cost loans.
  • Expanded financial support for mature and married students.

Healthcare

  • $345 million increase in hospital funding, including the first increase in base funding in five years.
  • Additional $250 million to expand home and community care.
  • Additional $75 million for residential hospices and palliative care.
  • Shingles vaccine available for free to seniors aged 65-70.
  • Additional $130 million over three years for cancer care services.

Social Programs

  • 1.5% increase in rates for adults receiving Ontario Works and Ontario Disability Support Program.
  • Additional $178 million over three years for the Long-Term Affordable Housing Strategy.
  • Enhancing local funding for the Community Homelessness Prevention Initiative by $45 million over three years.
  • Working with communities and researchers to design and implement a Basic Income pilot project.
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