Canada's largest province will emerge from this fiscal year in much better shape than previously forecast, thanks to a modest rebound in the economy. But a concerted effort to erase its record deficit will leave the McGuinty government with little wiggle room to hand out pre-election goodies.
Ontario Finance Minister Dwight Duncan will release a status-quo budget next Tuesday that will not contain new major spending initiatives, across-the-board cuts to program spending or tax relief.
Instead, Mr. Duncan will set his sights on eliminating the deficit and is promising "good news" on that front, hinting that the red ink for the year ending March 31 will be much lower than his earlier projection of $18.7-billion.
In a campaign-style speech to the Toronto Board of Trade on Thursday, Mr. Duncan went on the attack against Progressive Conservative Leader Tim Hudak, who is currently leading in public opinion polls.
Mr. Hudak has not yet unveiled his campaign platform beyond saying he would scrap the "bloated" Ontario Power Authority and local health-care agencies, both created by the Liberals. But the McGuinty government has repeatedly said Mr. Hudak would follow his mentor and predecessor Mike Harris and lay off doctors, nurses and teachers.
Mr. Duncan also said Mr. Hudak would make a one point cut to the harmonized sales tax, thus reducing the province's revenues by $3-billion.
"They should be afraid of a Harris-Hudak government," Mr. Duncan said, referring to voters. "What they are very clearly setting up to do is to put us into a deeper deficit hole."
Mr. Duncan sought to differentiate the Liberals from the Tories by promising that the government will not touch funding for health care and education, two key priorities that together consume 70 per cent of program spending. The government will pare spending elsewhere, he said, and has identified nearly $1.5-billion in savings over three years in a number of areas, including the province's 31 jails.
The government plans to transfer many of the province's prisoners out of old, inefficient jails dating back in some cases to the 1850s into new facilities now under construction in Toronto and Windsor.
Newer jails are bigger and more cost effective, because the ratio of prisoners to staff is higher, Mr. Duncan told reporters.
"In some older jails, the ratio of inmate to guard is one to one," he said.
There are currently 8,395 Ontarians in jail, including those serving sentences of two years less a day and those on remand, said Joe Kim, a spokesman for Correctional Services Minister Jim Bradley. It costs the province $179.97 a day on average to house a prisoner, or $65,689 a year, he said.
Mr. Duncan also said his office is exploring spinning off some government services to the private sector as part of a long-range plan aimed at freeing up capital. But he said the government is not revisiting selling off a portion of the province's biggest Crown corporations.
"We have to be more creative and really look at how we do government better to get at waste and be more efficient," he said.
Last year, Mr. Duncan ruled out merging Hydro One, Ontario Power Generation, Ontario Lottery and Gaming Corp. and the Liquor Control Board of Ontario and then selling off a chunk of the resulting company. The sale would have raised windfall proceeds of $15-billion that the government had planned to use to pay for initiatives in the election campaign.
Progressive Conservative finance critic Norm Miller was skeptical on Thursday about the government's plan to erase the deficit in seven years, saying it has increased spending by 70 per cent since 2003.
"A leopard doesn't change its stripes," he said.
Some numbers that will play a key role in the Ontario budget
Percentage of total program spending taken up by health care and education
Savings that Finance Minister Dwight Duncan is promising to find over three years in a number of areas, including the province's jails.
What it costs the province a day for each prisoner
The number of prisoners in Ontario's jails
The date of the next provincial election