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Ontario NDP Leader Andrea Horwath speaks to The Globe and Mail at an editorial board meeting in Toronto, Ont. on Thursday, September 29, 2011.Michelle Siu/The Globe and Mail

Ontario Premier Dalton McGuinty is calling on New Democratic Party Leader Andrea Horwath to tell him where he could cut program spending to offset her conditions for saving his minority Liberal government.

A preliminary estimate done by the Ministry of Finance reveals that the proposals put forward by Ms. Horwath would cost about $1-billion a year. Finance is still working on a final tally.

"We're trying to craft a budget that reins in spending, not one that expands further spending," Mr. McGuinty told reporters on Wednesday. "Where specifically should we cut to offset that $1-billion in new annual spending?"

Mr. McGuinty did not provide a breakdown on how Finance officials arrived at the $1-billion figure.

Ms. Horwath said she was "taken aback" by Mr. McGuinty's comments and accused the Premier of ignoring the fact that her tax-the-rich proposal would raise additional revenues of just over $500-million. She said she wants the government to spend that money on giving hydro consumers a break on prices and on more daycare spaces.

"I'm waiting now for him to make a decision," Ms. Horwath said in an interview. "He's got to make the tough choice now. Is it millionaires or daycares?"

Ms. Horwath has stressed that the changes her party wants the governing Liberals to incorporate into their budget would not involve spending additional money. Nor, she said, would the changes increase the $15.3-billion deficit the province is already facing or cause the government to miss its target for balancing the books by fiscal 2017-18.

Sources close to the talks between the two parties suggested that Mr. McGuinty was employing a classic bargaining stance and merely posturing when he quibbled with the NDP's math. NDP insiders said the government wants the NDP to abandon those proposals that are not consistent with its efforts to get out of certain areas.

The government plans to cancel a subsidy for the horse-racing industry, which costs more than $350-million a year, as well as a subsidy for a passenger railway in Northern Ontario. Ms. Horwath has asked the government to provide transition funding for the two, but has not attached a dollar figure to that demand.

The creation of a new tax bracket for people who earn more than $500,000 a year would raise additional revenues of $537-million, according to the NDP's calculations. This is an idea the government is likely to accept, the NDP insiders said, because public opinion polls show widespread support for trying to reduce the disparity between the very rich and the rest of society.

The NDP wants the bulk of this new money used to remove the provincial portion of the harmonized sales tax from home heating bills. But it is also calling for more daycare spaces and extra funding for those living on disability.

The NDP's other big spending proposal is for a tax credit that would reward companies that create new jobs. Employers would be reimbursed 10 per cent of the salary paid to a new employee during the first year to a maximum of $5,000.

Ms. Horwath has called on the government to use funding from its proposed $2-billion jobs and prosperity fund to finance the $250-million tax credit.

Ms. Horwath said that notwithstanding Mr. McGuinty's latest comments, the behind-the-scenes talks between the two parties have been "pretty respectful," leaving her hopeful that an accord can be reached.

"I'm hoping his comments were just bravado and playing hard ball," Ms. Horwath said.

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