Ontarians will be heading to the polls next June, and with many in the mood for change, this week's budget marks the start of a long campaign by Premier Kathleen Wynne and her Liberals to win voters back.
Nine years of consecutive deficits will come to an end with Finance Minister Charles Sousa's pledge to balance the books, giving the Liberals some wiggle room to spend new money over the next year.
"In a sense, the 2017 budget represents the start of a new era. We're no longer working to eliminate the deficit. But our principles remain the same: to build Ontario up in a balanced way," Mr. Sousa has said.
After unveiling an expensive hydro rebate program and an aggressive housing strategy over the past year, the budget will pour new money into health care. There will also be a few goodies for target groups, such as the already announced public transit tax credit for seniors and extra funds for childcare.
Here are six things you need to know before Thursday's budget:
Ms. Wynne is Canada's least popular premier. Her approval rating has been tumbling since late 2014, and in March the Angus Reid Institute's polling had her approaching the single digits, with just 12 per cent of Ontarians supporting her.
With the Premier dispelling rumours of unease in her caucus over the low polling numbers and vowing to fight the 2018 election as Liberal Leader, the party will be looking for a path to victory. That starts with the budget.
While Ms. Wynne has presided over a strong economy and has moved to control sky-high electricity rates and out-of-control housing costs, some in her caucus have expressed frustration over a public that still dislikes her. Ontarians have told pollsters that they disapprove of some of Ms. Wynne's fixes and the pace of her reaction to some crises.
In power since 2003, the Liberals have found ways to reinvent themselves in the past. Thursday's budget will start laying out how they intend to do so over the next year.
A balanced budget
A fast-growing economy and years of tight spending limits are expected to deliver Ontario's first balanced budget in almost a decade. It will be Mr. Sousa's fifth budget and the first time he won't be tabling a deficit.
Since the financial crisis, the province's debt has almost doubled to $304-billion, with deficits adding almost $90-billion to the debt since 2008. With a return to balance, the Progressive Conservatives at Queen's Park want a plan to pay down the debt, while the New Democrats want the Liberals to boost public spending after years of budget increases that have fallen below the rate of inflation and population growth.
While a humming economy has helped Mr. Sousa – the province's economy grew by an inflation-adjusted 2.7 per cent last year, almost double the national growth rate – the long-term outlook is not positive, especially if the Liberals go on a pre-election spending spree. The independent Financial Accountability Office of Ontario has warned of a return to deficits within two years as spending pressures mount and taxes fail to keep up. It expects the deficit to hit $1.7-billion by 2020.
The Ontario government has squeezed the province's health sector over the past five years in the race to balance its books, forcing doctors and hospitals to do a lot more work with little new money. Hospitals' base budgets have been frozen for four of the past five years, and physician payment rates have been reduced.
Ontario's per-capita funding of hospitals is now the second-lowest in the country, and the province has the fewest beds and shortest patient stays per capita, according to the Ontario Hospital Association.
The strongest signal Mr. Sousa has sent prior to this budget is that he'll be sending money to hospitals, increasing the most expensive part of the government's biggest budget line. As a tease on Tuesday, he announced plans to inject $20-million into respite care.
While the government's spending plan calls for the health budget to be kept to 1.7-per-cent annual growth through to the end of the decade, the Financial Accountability Office has questioned whether quality can be maintained at that level. The hospital association has called for a 4.9-per-cent increase this year and another 4-per-cent increase next year.
Moving to Ontario
People are moving to Ontario at the fastest pace in 29 years, drawn largely to the Greater Toronto Area's fast-growing economy and diverse population. This has put pressure on affordable housing, transit systems, roads and public services.
Almost 20,000 more people moved to Ontario than left for other provinces in 2016, a shift after years of net migration out of the province. Due to stubbornly low oil prices and depressed economies across the Prairies, the flow of moving vans headed to Alberta from Toronto has been thrown into reverse.
As Ontario's population grows, the Liberals have put forward plans to spend $160-billion on infrastructure projects over the next 12 years. The money is being earmarked to rebuild schools, replace bridges and expand transit systems. With cities across the province clamouring for money, expect Mr. Sousa to find some new funding or to allocate existing money to pet projects on Thursday.
The federal government has announced plans to legalize marijuana by July of next year, but the government's Liberal cousins in Ontario still have a lot to figure out. The province has yet to announce how it will sell the drug, what the minimum age for purchasing it will be, how drivers will be kept safe and how it will be kept out of the hands of minors.
Ontario has Canada's largest population of marijuana users, with more than a million people admitting to using the substance over the past year, according to the most recent Statscan data available from 2012. While the industry could be worth billions, Mr. Sousa has not put a number on expected tax revenue but has instead indicated that most of the money would be earmarked for law enforcement and addiction treatment.
Whether or not the LCBO will one day carry marijuana beside a bottle of merlot remains an open question.
A week before the budget, Ms. Wynne's government took aggressive action to control Ontario's overheated housing market by taxing buyers and ushering in rent controls. In total, the government announced 16 measures to slash red tape, get new homes built and rein in a real estate industry that has used questionable sales practices at times.
It was a far-reaching plan that included $125-million over five years to encourage the construction of new rental units – though, with a new foreign buyers' tax, the housing strategy is expected to be revenue neutral. While there might be new money for affordable housing, most of the government's housing plan has already been unveiled.
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