New spending, multi-year deficits

As it braces to fight for reelection this spring, Ontario’s Liberal government has rolled out a spending package that targets nearly every demographic while plunging the province back into deficit, with the books expected to stay in the red for six years.

The 2018-2019 budget, tabled Wednesday by Finance Minister Charles Sousa, pumps billions into health care, child care, and support for seniors, though many of the spending promises had been announced by Premier Kathleen Wynne in recent days.

The $158.5-billion fiscal plan — the Liberals’ election platform for the June vote — projects the province will run a $6.7-billion deficit in 2018-2019 and won’t return to balance until 2024-2025.

Last year, the government posted its first balanced budget in a decade, and vowed to stay in the black through 2019-2020, although two fiscal watchdogs - the province’s auditor general and financial accountability officer - had raised questions about its accounting practices.

Sousa brushed off suggestions the Liberals were pandering for votes, saying the government made a choice to run a deficit in order to provide much-needed support to Ontarians.

“This is not election-cycle decisions that we’re making, these are long-term in scope and they’re building upon decisions we have been making all along,” he said. “The responsibility we as government have is to what happens going forward ... This is about protecting people and ensuring that people are better off.”

Asked how voters could trust the Liberals to eliminate the deficit after they reneged on their promise to stay in balance, Sousa said the budget includes “a tremendous amount of prudence” in its projections.

“In the last 40 years, there’s been eight balanced budgets ... We are looking at the ability to make those investments over time and we will continue to support the people of Ontario.”

The province’s move back into the red comes as Ontario’s unemployment rate — at 5.5. per cent — is the lowest it’s been in 20 years.

Meanwhile, the provincial debt is projected to be $325 billion in 2018-2019, and interest payments this year will cost Ontarians $12.5 billion - the fourth largest spending item in the budget.

The Liberals’ fiscal record is likely to come under scrutiny as the party, which has held power for 15 years, fights to stay in government.

While much of the big-ticket spending was announced prior to the budget, the fiscal blueprint builds on a pledge made in last week’s throne speech: a drug and dental-care program for people without existing coverage.

The program, scheduled to launch in summer 2019, is expected to cost $800 million over the first two years.

It will reimburse participants up to 80 per cent of eligible drug and dental expenses per year to a maximum of $400 per single person, $600 per couple, and $700 per family of four.

The budget also includes a new initiative that would provide $750 annually to help seniors aged 75 or older live independently, offsetting the costs of maintaining their homes.

The program, starting in 2019-2020, would cost $1 billion over three years.