Ontario Finance Minister Charles Sousa delivered his first budget Thursday, trying to bring the province’s books closer to balance while offering some concessions to opposition parties. The Ontario Liberals’ minority government will need the support of either the NDP or Progressive Conservatives to pass the budget.
Here are five things to take from it:
1. It plays nice with the NDP
The first thing most journalists saw when they entered Thursday’s budget lockup was a news release listing six ways Premier Kathleen Wynne’s government will try to create a more “prosperous and fair” Ontario. What it didn’t say is that, other than infrastructure investment, all of them are responses to requests by the third-party NDP.
Some of these measures, such as making social assistance a little more generous or a $295-million youth-jobs strategy, the Premier might have been inclined toward anyway. Others, such as new home-care investment or changes to the Employer Health Tax Exemption to favour smaller businesses over larger ones, she might not have minded being nudged toward. A push to reduce auto insurance rates by 15 per cent required some Liberal nose-holding. But all told, they represent the bulk of the budget’s new initiatives.
Make no mistake: This is a document aimed to convince the New Democrats to keep the minority government in office. Whether even all those concessions are enough is not yet clear, with NDP Leader Andrea Horwath saying she’ll “consult with Ontarians” before deciding what comes next.
2. It stays the course on getting back to balance
Despite a much less aggressive tone on austerity than last year’s budget, Finance Minister Charles Sousa has maintained the same basic fiscal framework put in place by predecessor Dwight Duncan. The target remains to eliminate by 2017-18 a deficit projected (probably too pessimistically) to be $11.7-billion in the current fiscal year, after coming in at $9.8-billion in 2012-13.
That elimination is supposed to happen by continuing to keep overall program spending increases under 1 per cent annually. At the heart of that commitment is limiting the jump in health spending to less than 2 per cent each year (while shrinking some smaller ministries’ expenditures), with which the government has had surprising success of late.
Still, the deficit-cutting to date has been the relatively easy part, because of one-off savings from measures such as wage restraint. Liberals concede that more structural reforms will be needed in the years to come, with the budget offering only vague indications on that front (more on those in point No. 5).
3. It has (more of) a social conscience
After constantly talking about making Ontario more “fair,” Ms. Wynne went well beyond the NDP’s demands in making social assistance more generous. Beyond letting welfare recipients keep more employment income, the government is also proposing to let recipients keep more of their liquid assets, along with providing a 1 per cent increase to the social assistance rate and small top-ups for individuals without children.
Many of these changes are marginal. But along with other budget components – $42-million in additional funding for adults with developmental disabilities, an extra $30-million over three years for legal aid, investments in aboriginal education and housing – they represent a break from the single-minded focus on cost-cutting in last year’s budget, when then premier Dalton McGuinty’s most significant change to social assistance was a delay in increases to the Ontario Child Benefit.
4. It steps up economic activism
The budget proposes a few targeted business investments, such as $45-million over three years for the music industry. More significant is the effort to combat youth unemployment, which goes beyond granting the NDP’s request for $195-million to give employers hiring incentives with another $100-million to create several other related funds – one that would provide mentorship and training for young entrepreneurs, another geared toward research and development, a third creating pilot projects aimed at getting businesses to improve training.
With new money also provided for infrastructure, including in northern and rural Ontario, the budget generally reasserts the government’s role in stimulating economic growth in a way that was mostly set aside during the austerity push after the 2011 election.
5. It contains a lot of foreshadowing
Perhaps more interesting than what’s in this budget is what it implies will be in the next one.
There is, as expected, a commitment to new revenue streams for transit expansion after a report this summer from the planning agency Metrolinx. (For now, the government has committed only to introducing tolls to some high-occupancy lanes.) But there are also many hints about how the province’s fiscal challenges will be tackled – from expanding income testing to tightening or eliminating corporate tax credits to a surprising couple of lines about working with school boards to curb education spending, not to mention further efforts to contain public-sector wages and pension costs.
It all serves as a reminder that this budget is largely about buying Ms. Wynne more time, with the real heavy lifting to start if and when she gets a chance to oversee a second one.