By QP Briefing Staff
If you believe the vision outlined in the government’s 2015 budget, the books can be balanced in three years by simply letting the economy grow while keeping a tight lid on program spending.
This will happen despite ambitious infrastructure spending, on the order of $130 billion over 10 years, which will eventually pay off by stimulating even more economic growth.
That’s if you believe the vision outlined in the budget. The core premise of this vision is that lower oil prices, a lower Canadian dollar and a strengthened U.S.
economy will boost Ontario’s revenue by about $5 billion for each of the next three years, going from $118.5 billion in 201415 to $134.4 billion by 2017-18.
Meanwhile, the plan is for practically no increase in program spending during that period, keeping it steady at about $120 billion until 201718. The interest payments on debt will keep rising, going from $10.7 billion in 201415 to $13.2 billion in 201718. This would bring total expenses in 201718 to $133.2 billion.
The deficit is projected to shrink to $8.5 billion in 201516 and $4.8 billion in 201617, both of which are slightly lower projections than in last year’s budget.
The government’s net debt projection for March 31, 2015, is $284.1 billion — up from $267.2 billion last year.
“We must build”
Finance Minister Charles Sousa called the budget “a statement about where we want to go next, about what we will do next together as Ontarians to build a stronger province.”
He singled out infrastructure spending as the highlight of the document. “For a long time now, we have not been building fast enough to keep up with our needs,” he said. “We can’t afford any more delays. We must build.”
The government’s infrastructure plan remains largely unchanged, though details have been filled in on major projects such as Regional Express Rail (electrifying the GO Train corridors) and the Hurontario LRT. The “assets optimization strategy” will deliver an extra $2.6 billion over what the Liberals had previously
been planning for, raising the total transportation spending in the Moving Ontario Forward plan to $31.5 billion (up from $29 billion last year).
A lid on spending
The Liberals are relying on several measures to keep spending in check, particularly their Program Review, Renewal and Transformation process. PRRT is designed to help sniff out $500 million in annual program savings by going linebyline through government programs and services and routing out inefficiencies.
Treasury Board President Deb Matthews is leading the program review efforts, and both she and Sousa see it as a way to dodge acrosstheboard cuts.
In 201415, the program review savings target was $250 million, which the government says it met through various initiatives such as negotiating lower costs for vaccines and telehealth services, negotiating a new agreement with AMAPCEO that achieved savings in entitlements, and finding other ways of reducing costs for supplies, travel and office space.
Digging up the underground economy and bolstering revenues also remains a focus for the government. Newly introduced was a proposal to ban the use, manufacture or distribution of “electronic sales suppression technologies” The technology allows for the use of software known as “zappers,” which let the user duck reporting sales records, including taxes paid by customers.
For the two biggest ministries, health and education, spending is forecast to increase slightly each year but will be mitigated by various measures. Justice and the children’s and social services sector will also see slow growth. The rest of program spending will be cut by 5.5 per cent on average by 2017-18.
The province’s healthcare funding is slated to grow an average of 1.9 per cent over the next three years, up from the $50 billion set aside in the 2014 budget. The government is planning to restrain spending through additional changes to the drug benefit plan (expected to save more than $200 million a year), changes to physician services payments that have already been implemented and a new hospital funding model that’s been rolling out since 2012.
In education, the government’s $25- billion budget will be frozen for the upcoming 201516 school year, but is set to increase 2 per cent annually by 201718. To help offset the costs of continuing to roll out fullday kindergarten, as well as overbudget school projects and boosted wages for childcare workers, the province is planning to consolidate schools and create “community hubs” that would share school space with healthcare and social services.
The opposition oppose
The opposition parties argue these minimal increases actually amount to cuts when considering inflation, stressing a 3 percent to 5 percent hike in healthcare spending would be necessary to compensate for increased costs in the system.
The Tories immediately said they would not be supporting the budget, say it failed to meet their preannounced conditions (which included demands that were obviously not going to be met, such as cancelling cap-and-trade and the Ontario Registered Pension Plan).
Interim PC Leader Jim Wilson pointed out the document had a higher growth rate for debt interest than it did for health or education.
“There is no plan to deal with the debt — it is just going up and up. Ontarians can’t afford this budget,” he said.
NDP Leader Andrea Horwath, meanwhile, condemned the budget for failing to protect public services and promising a “fire sale” of Hydro One.
“Ontarians … did not vote for a plan that fires nurses, closes schools and weakens social services,” she said. “They didn’t O.K. the sale of our revenue-generating hydro system for a quick buck.”