Kathleen Wynne’s Liberals are considering asking upper-income Ontarians to make do with less, as they seek to spread the pain of fighting a $12-billion deficit and find common ground with the third-party NDP.
According to multiple sources in and around the provincial government, the Liberals are looking at bringing “means testing” to more of the province’s expenditures as they prepare the first budget since Ms. Wynne became Premier.
Government officials stressed that few of the big decisions around the budget – unlikely to be delivered before April – have yet been made. But they acknowledged that although the savings would likely be relatively modest, tying investments more to need could have considerable symbolic value in conveying that all Ontarians are being asked to do their fair share in the deficit battle.
Means testing is already being introduced to seniors’ drug coverage, in the form of deductibles for recipients with annual incomes over $100,000 or combined spousal income of more than $160,000. While it is unlikely the government would go that route on other health-care expenditures, a range of other programs could be on the table.
That includes personal income-tax credits that are not already means-tested, as others are. An obvious example is the Children’s Activity Tax Credit, which reimburses parents 10 per cent of the costs of physical and instructional activities, at an estimated annual sum of $80-million. Another is the Healthy Homes Renovation Tax Credit, which returns up to $1,500 of money spent renovating homes to make them safer for seniors.
A bigger target would be the Ontario Clean Energy Benefit, which essentially pays 10 per cent of all homeowners’ hydro bills (along with those of some businesses) out of government coffers at a cost of more than $1-billion annually. A temporary measure introduced by former premier Dalton McGuinty to try to appease voters angry about soaring energy prices, it is supposed to end in 2015. But if there is a thought of keeping it longer, Ms. Wynne could target it to need rather than helping subsidize high-income earners’ relatively high consumption.
Another option for the Liberals, albeit one they are squeamish about because of the likely political fallout, would be to tighten the eligibility requirements for the 30-per-cent tuition grant that was a key 2011 election promise and implemented shortly thereafter. For postsecondary students to qualify, their parents must have a combined income under $160,000; that threshold could be lowered.
On that and other fronts, the Liberals face difficult decisions about just what qualifies as high income. Government sources acknowledged that two-income families with combined salaries in the $160,000 range, or even higher, still face financial pressures and are unlikely to see themselves as affluent. But on tax credits and other expenditures, cutting off only the very highest earners would be of almost no help with budget pressures.
Still, Ms. Wynne could see a further shift toward means testing as a way of moving toward her self-identified priority of a more “fair society.” And politically, it might help the Liberals reach out to erstwhile supporters who have been put off by the government’s austerity push, including fights with teachers and other public-sector workers.
Means testing is not on the list of policy demands put forward by NDP Leader Andrea Horwath in return for propping up Ms. Wynne’s minority government, and a senior New Democrat said it has not come up in informal discussions between the parties. Nevertheless, it could fit neatly into a budget that will be aimed partly at winning left-of-centre support.