Ontario Premier Dalton McGuinty rolled up his sleeves and began the mammoth task of dealing with the $5.6-billion deficit left by the Progressive Conservatives Thursday, promising to attack "our first major challenge" by removing the price cap on electricity.
He said former premier Ernie Eves's retail electricity rate cap of 4.3 cents a kilowatt-hour had cost Ontarians more than $700-million.
The Premier said he wants to introduce "a price regime that better reflects the true cost of electricity."
He immediately admitted: "This may not be popular. It may not be in our immediate self-serving political interest...But we firmly believe it's the right thing to do, so we're going to do it."
Energy Minister Dwight Duncan has been asked to present a plan to cabinet within 30 days. Mr. McGuinty said it's time for an independent body to regulate electricity, rather than politicians.
In a speech to the Economic Club of Toronto Thursday — his first public appearance since an audit revealed Wednesday the Tories had left a $5.6-billion deficit — Mr. McGuinty outlined his strategy to keep election promises despite the shortfall — while getting in a few digs at the former Conservative government.
"The Tories didn't just throw caution to the wind, they tied it to an anvil and threw it over a cliff."
The Premier vowed to introduce legislation to quickly begin to manage the government's finances.
The legislation, to be introduced immediately after the legislature resumes sitting in a few weeks, includes:
Beyond that, the Liberals want to raise the tobacco tax to the national average, which they are counting on to generate $140-million in the coming year, and, following the recommendations of a provincial auditor's report, promised to collect from corporations which are not paying their taxes.
Mr. McGuinty also vowed "immediate restraints on discretionary spending."
That includes to introduce a government-wide hiring freeze, eliminating tax-payer funded self-promotional government advertising and eliminate "wasteful spending" on highly paid consultants."
He and his cabinet plan to spend the next month consulting with Ontarians across the province on how to battle the whopping deficit.
He said if the Liberals do nothing, by 2006 the deficit would hit $8.6-billion by 2006-07. But he said his government will work together and "clean up the mess" left by the Tories.
The Premier wondered at the gross miscalculation by the Conservatives.
"Never has any provincial budget so inaccurately stated the province's finances. To be off by $5.6-billion is incomprehensive and unforgivable.
"What happened to truth here?"
Mr. McGuinty's campaign promises were based on the assumption that his government would have to overcome a $2-billion deficit.
Instead, Wednesday's report by former provincial auditor Erik Peters says that revenues are $4.4-billion lower than expected and expenditures, $1.5-billion higher.
During the election campaign, Mr. McGuinty said the Liberals would keep the electricity cap in place until 2006. Ratepayers shouldn't have to pay for the mistakes of any government, he said at the time.That artificially low rate cap of 4.3 cents a kilowatt-hour was implemented by Mr. Eves in November 2002. The real cost of electricity use has been closer to six cents a kilowatt-hour.
Tory-imposed balanced budget legislation allows the Liberals to run a deficit this year, but they are forbidden from doing so next year.
Many analysts are skeptical that Mr. McGuinty will be able to balance the books for at least another year or two given the size of the shortfall.
41
