Ontario is plunging back into red ink for at least the next six years as the province’s Liberal government promises billions in new spending on marquee social programs only weeks before a spring election.
The $158-billion budget unveiled on Wednesday is a substantial shift for Premier Kathleen Wynne and the Liberals, who celebrated balancing the books last year.
The budget unveiled on Wednesday forecasts a deficit of $6.7-billion for 2018-19 that would not be eliminated until 2024. The province would give billions for improvements in health care, child care and support for seniors, and a dental and drugs plan. The budget also includes tax changes that would increase the burden for nearly two million Ontarians.
The changes will affect virtually everyone in the province in some way.
Political opponents were quick to accuse Ms. Wynne of trying to buy votes before the June 7 election. The long-governing Liberals are trailing the Progressive Conservatives in opinion surveys. However, Finance Minister Charles Sousa said the province has chosen to go into deficit at a time of “economic uncertainty.”
The projection of years of shortfalls comes as unemployment in Ontario is at its lowest level in nearly two decades and economic growth in the province has outpaced that of most industrialized countries.
“This is not election-cycle decisions that we’re making, these are long-term in scope,” Mr. Sousa, who was tabling his sixth budget, told reporters. “I accept the fact that we’re in an election and the Opposition is going to be talking about all the things they are going to cut.”
Despite several years of projected deficits in his latest budget, Ontario Finance Minister Charles Sousa says built in “prudence” will allow a return to balance. Opposition leaders said the Liberals are trying to win votes with spending.
The Canadian Press
Doug Ford, the newly elected Progressive Conservative Leader, said that if his party forms government in June, it will focus on returning the budget quickly to balance and would go through every spending program to see if money is being wasted.
“All they do is tax, tax, tax, spend, spend, spend. People are fed up,” Mr. Ford said at a press conference. “The Liberals think they can buy your vote, your vote is for sale.”
While his party has yet to update its election platform since changing leaders, Mr. Ford would not commit to cutting any of the new programs funded on Wednesday.
The new spending will provide billions of dollars for increases in hospitals’ operating budgets, seniors’ benefits and a new child-care program that covers all children from the age of 2 1/2 until they enter kindergarten. The budget also unveiled a new dental and drugs program that would cover uninsured costs for people without workplace health benefits up to a maximum of $400 for a single person, $600 for a couple and $700 for a family of four.
Before the budget was tabled, the government unveiled an expansion to the province’s pharmacare plan, which will now cover the costs for people under the age of 25 and over 65. The new dental and drug plan would bridge the age gap in the pharmacare plan for many people.
The spending document also contained a new $1-billion program to help seniors stay in their homes, covering maintenance expenses such as snow removal and lawn care. More money was also allocated to long-term care, community care, programs for vulnerable people, mental-health care and a 3-per-cent increase to income-security programs.
In a move to simplify personal tax brackets, the budget would increase taxes by about $200 annually for about 1.8 million people who make more than $92,000. Nearly 680,000 people who make between $82,000 and $92,000 would get a small tax cut of about $130 each year. The government is also looking to raise hundreds of millions in new revenue by closing tax loopholes and catching more tax cheats.
While Ontario has one of the largest subnational debts in the world, expected to be more than $308-billion by the end of March, the budget contains no plan to begin to pay down debt.
The province’s debt-to-GDP ratio is expected to increase to 39 per cent by 2021, which could be higher than Quebec’s level of indebtedness at that time, according to University of Calgary economist Trevor Tombe. “That hasn’t happened in generations. It’s a real reversal of fortune,” he said.
Bank of Montreal chief economist Douglas Porter said the government’s decision to go into deficit when the economy is near capacity is unusual. “We’re likely to face a downturn in the next three to five years. This is really the time to be strengthening finances, not weakening them,” he said.
Jerry Dias, the president of Unifor, Canada’s largest private-sector union, said he supports the budget. “There’s no question that this is a pre-election budget. It’s a socially progressive budget, it has things Canadians have been fighting for years to have,” he said.
Opposition parties have argued that the Liberals have not done enough to spread the economic gains of the past decade to lower-income Ontarians outside the Greater Toronto Area. Ms. Wynne acknowledged the criticism in recent weeks and promised new spending to help create more “fairness” in Ontario − a term that appears dozens of times in the 308-page budget.
Andrea Horwath, the Leader of the New Democrats, said the plans don’t go far enough and blamed the Premier for continued overcrowding in hospitals, unaffordable housing and expensive hydro bills.
“This budget will not undo the damage done by her government,” Ms. Horwath said. “Kathleen Wynne’s budget falls short of the hype. It falls short of what Ontarians need.”
Toronto Mayor John Tory praised the budget for providing new money for energy retrofits for the city’s dilapidated public housing that his staff says totals $265-million over the next three years. The latest money follows cash for social-housing repairs announced last year after Mr. Tory waged a public campaign against the government over the issue.
With a report from Jeff Gray