Big-spending budget perilous for province

Premier Kathleen Wynne’s activist agenda includes public prescriptiondrug coverage for Ontarians under 25, a Big Shiny Thing over which she’ll be happy to fight the 2018 election.

Drugs are a growing part of total health spending. Much of the pressure comes from seniors, who are living longer, with the help of medications that control chronic conditions, but just about every kid needs at least antibiotics at some point, and some are less lucky.

We’ve relied on workplace benefit plans to cover a lot of those costs, but those are shrinking and more people are doing work that never comes with a steady employer and health insurance. If we like socialized medicine, restricting public drug coverage to seniors and people on social assistance — who are covered already — is strange. Filling the gap has both logic and decency behind it. It’s also superb politics. Targeting pharmacare at children and young adults means peace of mind for parents and help for entrylevel workers going gig to gig or contract to contract, who are the least likely to have benefits-included jobs. These are voters the Liberals love and who they hope will love them back.

When the youth pharmacare program kicks in next January, the election will be bearing down and the Liberals will be able to challenge the Progressive Conservatives to either commit to keeping it or justify scrapping it. See what a trap Obamacare has become for Republicans in the United States, who’d gotten as far as convincing most voters that publicly subsidized health care was a bad idea, right up until they tried to take it away.

Finance Minister Charles Sousa says the full-year cost of the program is $465 million.

The Liberals learned a trick from Paul Martin when he was federal finance minister, which is to underpromise and over-deliver. But if you keep your budget projections conservative, you can boast how you’ve beaten expectations and found money lying around.

Some of that extra money is in the budget as a “reserve,” or contingency fund. In a household budget, if we didn’t need the money, we’d probably leave it in a savings account or use it to pay down a credit card. Liberals spend it. And they had even more to work with as they overshot revenue projections. As they wrap up this fiscal year, they find themselves with $2.6 billion in unexpected revenue (including $640 million from its landtransfer tax) but having overspent their plans by only $900 million.

Add the leftover reserve and there’s the pharmacare money for next year, half a billion dollars for hospital budgets right away, money for child care and home health care, money for schools and transit and on the list goes. The $600-million reserve budgeted for this coming year alone will be enough to create a new program the size of the youth drug program and then some.

It helps them that the Liberals are taking advantage of a surplus in some public-employee pension funds, which auditor general Bonnie Lysyk says is improper but which other experts say is OK. And they’ve adopted a sort of partial distinction between operating spending and capital spending, which used to be mashed together into each year’s budget in a way they no longer are.

But in spite of this, in spite of the fact interest is pushing the province’s real-dollars debt up for years to come, Sousa gets to say he’s balancing the budget and spending more on things Ontarians want. All this spending comes with a risk. Although Ontario’s debt burden is levelling off, it’s still the highest it’s ever been. We borrow, we stop borrowing, we borrow, we stop borrowing, but we never pay off what we’ve borrowed. We don’t use the good times to recover from the bad.

It all might be worth the cost, but none of it’s free.