National Post (National Edition)
Ontario budget an honest effort to reset
Long view of post-COVID landscape
There are two types of Ontario budgets. One tells taxpayers how their money will be spent and what that spending is intended to achieve. It is a species long thought extinct. The other is an indigestible word soufflé made up almost entirely of political hot air. Those budgets, as partisan as an election brochure and about as informative, have been the norm in Ontario for more than a decade.
So, congratulations to Finance Minister Rod Phillips for bringing in an old school budget Thursday that is plain in intent and laden with facts. Any budget whose goals can be described in three words is a good piece of work. In this case, the words are protect, support and recover. The focus is helping Ontarians get through the pandemic and re-energizing the economy.
The minister himself describes the budget as “workmanlike” and underlined the point by wearing a pair of construction boots for his speech.
The Ontario budget is the antidote to the federal government’s nonsensical argument that the uncertainty of the pandemic makes budgeting just too challenging, a job for later, maybe when the fiscal year is almost over. The most that can be said for the federal non-budget is that it can be described in a single word: more.
By contrast, Ontario’s budget identifies what will be spent this year and the next two, clearly indicating how much it thinks the pandemic will cost. The $45 billion pandemic cost is an educated guess, of course, but it’s a welcome return to the idea that government should have a plan, a notion in vogue as recently as a year ago.
Doug Ford and his PCs were elected on a promise to eliminate the deficit, but that kind of thinking is long gone. Phillips’s budget delivers record spending and a record deficit in 2020-21. No surprise there, but the deficits will remain massive in the next two fiscal years as well, coming in at $33 billion next year and $28 billion the year after that. Those numbers could be higher or lower, depending on the pace of economic growth, but it’s fair to say that budget balance is not remotely foreseeable.
Health care is always government’s biggest expense, and now it is inflated due to COVID-19 demands. This year health spending is pushed up by $8.3 billion on top of its $64.6-billion base. The government has wisely separated out base spending and COVID health spending in an attempt to head off any attempt to make the pandemic number the new health base.
The provincial government’s primary focus is naturally on spending required to get people through the pandemic, but it is also thinking ahead to how to revive the economy. That’s critical because Ontario is looking at what will likely be a long post-pandemic hangover.
This budget promises $4.8 billion of spending that the government hopes will speed economic recovery. Main measures are relief from Ontario’s high electricity rates for industrial and commercial users and reduced business education taxes. Importantly these are cuts that will help a broad range of businesses, not just those that make a profit and would benefit from corporate tax reductions. The electricity reduction is an old-fashioned subsidy that makes up the gap between reasonable electricity rates and Ontario’s real rates, but it’s still necessary.
There is also a proposal for a lower property tax rate for small businesses. If municipalities bring it in, the province will “consider” matching the money. Don’t expect a stampede there.
Overall, these stimulative measures are modest, but they will help make Ontario more economically competitive and are preferable to direct economic handouts like the $295 million the government recently gave Ford Motor as an inducement to build electric vehicles in Ontario. Letting businesses keep their money is better than taking it and redistributing it to supposed winners.
This is a busy budget with a lot of moving parts, but few of them involve vote-buying handouts to regular people. A cynic would say it’s too early for that, but it is perhaps fairer to give the government credit for spending the additional money on top priority areas of pandemic protection and economic regeneration.
Overall, this new Ontario budget is an honest effort to deal with real problems, and one that provides as much certainty as government can in uncertain times.