Budget aims to please NDP with nearly $1B in spending commitments
Sandie Benitah , CP24.com
Published Thursday, May 2, 2013 4:07PM EDT
Last Updated Friday, May 3, 2013 10:32AM EDT
Ontario’s Liberal government tabled a $127.6-billion budget Thursday fraught with spending commitments meant to appease the NDP government and keep the Grits in power.
The budget, tabled by Finance Minister Charles Sousa at Queen’s Park Thursday afternoon, proposes about $960 million in new spending over the next five years. The investments will go towards reducing gridlock, helping Ontario’s underprivileged and boosting employment among youth.
The budget carried few surprises as most of the investments were announced in previous weeks by the government. Some of the new initiatives announced include:
- $404 million in increased support for welfare recipients
- More high-occupancy vehicle lanes across the Greater Toronto Hamilton Area
- $295M over two years for a youth jobs strategy
- Tax relief for small business in the way of an employer health tax exemption from $400,00 to $450,000 of payroll
- More options and support that will assist seniors receiving home care
Sousa also used the budget to reiterate the government’s commitment to:
- Reducing auto insurance rates by 15 per cent on average
- Building toll options for drivers who wish to pay to drive on HOV lanes
- Giving cities a portion of the gas tax permanently
The budget was seen as an olive branch to the NDP government as the Liberal Party has spent the last several weeks fending off attacks over their cancellation of two gas plants – one in Mississauga and the other in Oakville -- during the 2011 election campaign. The decision cost hundreds of millions more than what the party originally told the public it would cost.
The Liberals now face a threat of an election as the Progressive Conservative Party has already said it would not support the government any longer.
During a media lock up Thursday, prior to the budget’s release, officials with the finance minister distributed a sheet detailing the NDP’s budget demands and the Liberals’ response.
Among several requests, the NDP had demanded the cuts to auto insurance and some relief for welfare recipients as well as health tax exemptions for employers. They also asked for youth job training. The Liberals threw money into each cause but NDP Leader Andrea Horwath said she was disappointed the government didn’t guarantee Ontarians home care for five days. Instead, the Liberal budget promised seniors quicker access to home care services and better options to keep them at home rather than a health care facility.
Nonetheless, Sousa said the budget has something in it for everybody.
“This is very much a budget prepared in collaboration with the people of Ontario,” he told reporters during the lockup. “We’ve received thousands of submissions. This is a budget that speaks to people of Ontario and this is how we’ve produced it. It more than satisfies (the opposition parties’) needs, it satisfies the needs of the public.”
When asked about creating a budget that would win the government favour with the NDP, Sousa said he had broader financial goals when he was putting it together.
“It’s not about negotiations, it’s about providing a fair and balanced approach,” he said. “It’s also about reducing the deficit. It’s about putting together a plan that works. More importantly we are prepared to work for the people.”
When questioned on her reaction to the budget, Horwath refused to say whether or not she would support the budget or not, saying that first, she needs to consult with Ontarians.
“I think it’s pretty clear we take our job in minority government very seriously,” she said. “It’s actually about trying to get results for people, not just about political gains. Yes, we need to be critical of their behaviour and yes, making sure that that behaviour doesn’t continue, but a big part of it is trying to get results for the people of Ontario.”
But PC Leader Tim Hudak was relentless on his position, despite the budget’s claim that the government will spend less than one per cent on programs for the second year in a row.
He and the party’s finance critic said while there is some good to be found in the budget, they were voting against a party who has been plagued with numerous spending scandals during their 10-year run.
“We are not rejecting a budget, we are rejecting a government,” said PC finance critic Peter Shurman. “They bought their way into power and now they’re buying off the NDP. It’s about power, not about auto insurance or youth employment, that’s what we reject.”
Hudak said the decision to support the budget or force the government into an election squarely depends on Horwath.
“Andrea Horwath will put this into the balance. But when she (says to the government) ‘you’re corrupt,’ I don’t see how she’s going to say ‘I support you until we see what you will do next time,’” Hudak said.
If the budget passes in legislature and the government remains in power, the Liberals will have to contend with an $11.7-billion deficit in the 2013-14 fiscal year.
Though that is about $1-billion below what was previously projected, it is about $2-billion more than the 2012-13 deficit of $9.8 billion.
Sousa explained the increase by pointing to the one-time savings the government made when it renegotiated contracts in the education sector. The new contracts allowed the Liberals to come about $5-billion below their projected deficit of $14.8 billion.
The budget reports the government remains on track to eliminate the deficit by 2017-18, projecting a surplus of about 0.5 per cent.
Trade will be a key factor to the province’s growth though Sousa cautioned in the budget that Ontario’s economy will develop at a moderate pace. He also pointed to economic instability in the U.S. and Europe as two key factors threatening Ontario’s growth.
Nearly 400,000 jobs have been created in Ontario since 2009, according to the budget, making up for all the jobs lost in the recession.
However, Ontario is still grappling with a ballooning debt of $273 billion, up $132-billion since the Liberals took power in 2003.
Sousa said the government will be better able to deal with the deficit by creating job opportunities and support for thousands of youth and underprivileged Ontarians through their six-part economic renewal plan which includes:
- Tax relief for small businesses
- Jobs, mentorship opportunities for youth
- Investment in infrastructure
- $45M to support jobs in music industry
- Expand access to global markets
- Access to opportunity for all communities
The youth job plan is multi-pronged and affects young Ontarians who are in high school and those graduating from post-secondary education.
In the Liberal budget, young Ontarians will have access to mentors who will help guide them through the start of their career, and seed-stage capital for start-up businesses.
The government plans on providing employers with hiring incentives in order to create more job opportunities for youth and will focus their efforts on helping high-risk, marginalized youth.
The Liberals also announced new graduates who start new businesses would not have to make an OSAP payment or pay interest on their loan for 1 year after graduation rather than the standard six months.