Fedeli’s fiscal update points to big cuts ahead

Something’s got to give in Ontario. And someone’s going to get hurt.

This much is clear from provincial Finance Minister Vic Fedeli’s first fiscal update.

Before being elected in June, Premier Doug Ford made sweeping and seemingly incompatible promises to cut taxes, slash spending, kill the deficit and still somehow manage to give Ontarians all the services they want and need.

The math in the fiscal update released last week shows how impossible Ford’s vows will be to keep. It does not compute. In fact, the numbers add up to big trouble. Begin with that deficit, often described as the largest of any subnational government in the world.

Assuming the mantle of fiscal superhero, Fedeli claimed to have already saved the province $3.2 billion in spending, which allowed him to eventually whittle down the previous estimate for the deficit by $500 million. Thanks to that, this year’s deficit now stands at an estimated $14.5 billion.

But that’s a lake of red ink Fedeli must drain before achieving the balanced books Ford promised.

The premier has insisted he can find $6 billion in efficiencies to lower the deficit. Yet even if he does, that would leave his government less than half way to its goal.

Of course, the Tories could always adopt the accounting policies of the previous Liberal regime, which they consistently rejected in opposition but would magically deliver much of what they now want in government. Will they be that hypocritical? Keep watching.

Meanwhile, the tax cuts Fedeli doled out like early Christmas stocking stuffers last week will only leave the government with new holes in the revenue pages of its budget.

Small businesses will get a tax cut. A planned tax hike for the wealthiest Ontarians will be cancelled.

On the positive side, the government introduced new tax cuts for low-income Ontarians, which it estimates will help 1.1 million workers. Henceforth, a single, minimum-wage earner will pay no provincial income tax. While that will ease life for many people, critics argue raising the hourly minimum wage to $15 — which Ford cancelled — would have helped more.

However you come down in that debate, it’s clear these and other cuts — including $1.5 billion lost because of the cancellation of the Liberals’ cap-and-trade program — add up to $2.7 billion in lost revenue for the Ford government.

So if the spending cuts are just marginally greater than all that forgone revenue, how do Ford and Fedeli achieve a balance? In this fiscal update, Fedeli was coy. He said he’s committed to balancing the books in a “reasonable” time frame. Moreover, Fedeli admits, “Everyone across the province will be required to make sacrifices” to attain fiscal Nirvana.

The finance minister might, in fact, have found some savings by cutting the independent watchdogs for the environment, vulnerable children and francophones. But while these jobs will supposedly be folded into existing ministries, it’s doubtful the changes will provide substantial savings. More to the point, a government that is so far doing next to nothing to fight climate change appears to be serving its own interests in ending independent environmental oversight.

Despite its flaws, even if this fiscal update delivered less that is positive than many people hoped for, it also caused less damage than many people feared.

But don’t be complacent. Remember the “sacrifices” Fedeli insisted all of us must make. What does he have in mind for his spring budget?

Fedeli’s axe may not have fallen this time. Most likely, he’s simply taken it away for a few months of keen sharpening.