Payments will go up, whether it’s ‘good debt’ or ‘bad debt’

Flush with cash, Ontario Grits spend on programs, not debt payments

There’s no missing the message here. The cover of the budget is black (as in, back in the black), and every single mention of “budget” in the press materials is preceded by the word “balanced.”

It’s been a long journey to get here after the astronomical $19.3-billion deficit in 2009-10, and the Liberals are going to make damn sure you know about it.

In fact, Ontario’s government has been handed a windfall. Revenue projections are way up: The government has nearly $4 billion extra to play with in 2017-18 than last year’s budget estimated, and there’s an extra $3 billion the following year. The main reason is taxes: corporate, personal and sales taxes are all coming in much higher than projected.

Oh, and the ridiculously hot housing market is expected to bring in land transfer taxes topping $3.1 billion next year. It brought in $1.8 billion just two years ago.

You can debate how much of this growth is sustainable (particularly with a certain U.S. president making protectionist threats), and how much credit the government deserves for it. But we’d be slamming the Liberals if the economy was tanking, so let’s not gloss over the fact things are going well.

The big question is what they’re doing now that they’re suddenly flush with cash.

The splashy headline from this budget is a new pharmacare program that will make 4,400 prescription drugs free for those under age 25. It seems like a good idea, and has the convenient political side-effect of blunting the NDP’s own proposal for universal pharmacare.

The Liberals claim it will cost around $465 million per year, which is significant but hardly eats up the new revenue.

And … that’s it for big new programs. Oh, there’s a $10-million tax credit for seniors taking transit.

Maybe the new money is going into paying down debt? No. The debt just passed $300 billion and is set to rise to $335.9 billion by 2020. The government would like you to know this will be “good debt” (they literally call it that in the budget) because it’s not from a deficit, but from borrowing for capital projects.

Well, good debt or bad debt, the interest we pay on all of it is going to keep rising from $11.6 billion next year to $12.6 billion in 2019-20. The net debt-to-GDP ratio is 37.8 per cent right now; in five years it will have barely moved to 36.3 per cent. (The Liberals say it will drop to 27 per cent by 2030, but a promise that far off is meaningless.)

If you’re going to spend the new money, the department that really needs it is health care, which has been squeezed in the past few years with annual spending rising slower than the rate of inflation.

Hospitals are struggling with overcrowding and wait times, and the province’s tight budgeting has helped cause an increasingly ugly dispute with doctors over compensation.

The budget does promise a boost to health-care funding, with an extra $7 billion over three years from what was previously planned. Yet pay close attention to that “three years” part: Most of the new money doesn’t flow until 2018-19.

What is the government doing with the revenue windfall, then?

More than a third of all new program spending next year is going into one area: the “other programs” line item, which is getting a cool $2.2-billion increase (a jump of 13 per cent). That happens to be where the government’s electricity relief programs fall.

Look, everybody wanted that relief — including both opposition parties. Sure, Liberal policies were a big cause of the skyrocketing rates in the first place, but it’s not like they were out of step politically by blowing huge amounts of money to lower them.

But if you work in an overcrowded hospital, or a courthouse or a jail or any other provincial institution straining under years of capped spending after the recession, the crisis over electricity rates is why this new glorious era of balanced budgets doesn’t feel all that different so far.