Ontario’s Liberal government is ramping up the province’s deficit with a big-spending budget designed to either forestall an election or pay off at the polls in the event of a snap vote. The spending plan – which hikes the shortfall to $12.5-billion – outlines a sweeping, left-tilting agenda including a new provincial pension plan, billions of dollars’ worth of new infrastructure and piles of money for social services.
Finance Minister Charles Sousa said the government has to intervene to stimulate a sluggish economy. “We’ve taken the deliberate step and the conscious step to make these investments this year,” he said. “That’s going to propel our economy to a level that otherwise wouldn’t occur.”
The reasoning behind the document, however, is as much about politics as policy. The Liberals are banking that the budget will be hard for the NDP to vote against.
And if they do, they hope the new spending will win them the ensuing election. The Grits control only a minority of seats in the legislature and, with the Progressive Conservatives vowing to vote down the budget, need the NDP’s support to avoid an election.
Just minutes after Mr. Sousa tabled the plan in the legislature, Premier Kathleen Wynne ratcheted up the pressure on NDP Leader Andrea Horwath to support it by giving her a one-week deadline to make up her mind.
“We are eager to implement key aspects of the document immediately,” Ms. Wynne wrote in an open letter. “We need to begin the process of putting the new Ontario Retirement Pension Plan in place, of building infrastructure across the province, especially through our Moving Ontario Forward plan for transportation and transit, and of creating good jobs and growing the economy.”
Ms. Horwath skipped the traditional news conference with reporters in the budget lockup, saying she would instead respond to the budget Friday. “I’ll be talking more in the morning,” she said as she left the legislature.
The hefty deficit is $2.4-billion more than the government’s target, but Mr. Sousa insisted he could still balance the books by 2017-18 using a combination of higher taxes on the rich and smokers, and brisker economic growth. The shortfall, he said, will fall dramatically to $8.9-billion next year.
But the blown deficit target could lead to a downgrade in the province’s credit rating in the weeks ahead.
“It’s obviously more than we expected and factored in, in our last review,” said Mario Angastiniotis, who analyzes Ontario’s finances for Standard & Poor’s. “And that’s disappointing.” While saying it’s “understandable given the weaker-than-expected economy” that revenues are not growing as much as expected, Mr. Angastiniotis noted the lack of “offsetting measures” in the form of greater spending restraint.
The Progressive Conservatives expressed the same concern. “The same government that caused the financial mess in Ontario is obviously unable to get us out of it,” PC finance critic Vic Fedeli said. “The Liberals are increasing taxes and the deficit at the same time. And to be quite frank, that takes a lot of doing.”
The Liberals have calculated that voters care less about the size of the deficit than they do about preserving program spending, one insider said. The source said the party’s internal polling and market research shows the minority of voters worried about the deficit are hardcore Tory supporters who would never vote Liberal in any event.
Ms. Horwath is under pressure on both sides. Some union leaders, whose members the NDP counts on to do much of the groundwork in an election campaign, urged her to support the spending plan. Unifor president Jerry Dias said in a statement that it provides “important investments in public services and infrastructure.”
Ontario Federation of Labour president Sid Ryan, who pointed to the higher wages for personal support workers and increased developmental services, added: “I like it – I think it’s an NDP budget, basically.”
Ms. Horwath’s advisers, however, are bullish about the party’s chances in an election and worried about being perceived as subservient to the Liberals. But voting against the spending plan will allow Ms. Wynne to portray Ms. Horwath as having opposed a spate of progressive measures.
And Mr. Sousa said his party is ready to fight an election on the document. “We will ask the opposition to come clean as to what they want to do. Let’s move on with it,” he said. “If the opposition wants to go to the polls, then we’ll take this to the people of Ontario.”