Not surprisingly, local and provincial politicians had varying reactions to the 2016 provincial budget announced last week.
The Liberal Party unveiled its $133.9-billion spending plan on Feb. 25. The next day Deputy Premier Deb Matthews said the budget will ultimately help create jobs, which she said is the biggest challenge facing Ontario considering the current state of the economy.
“We’re investing in people, we’re investing in jobs and the economy and we’re doing it in a fiscally-responsible, prudent way,” said Matthews, MPP for London North Centre, during a media conference call on Feb. 26.
“Our economy is leading the country but we still need to really focus on strengthening the economy, strategically investing in jobs for today and for tomorrow.”
Matthews added the government is also investing in tackling climate change and building infrastructure.
Deficits/debt
The budget includes a $4.3-billion deficit and will raise provincial debt to about $300 billion.
“That is a much-better-than-projected deficit for this year and a very clear path to balance (the budget) next year and maintain that balance the following year,” Matthews said.
She added, “This is our seventh budget in a row where we’ve exceeded our goal on a deficit reduction.”
Liberal officials have repeatedly stated the government will balance the provincial budget in 2017-18, but that was little consolation for local members of the opposition.
Perth-Wellington MPP Randy Pettapiece pointed out the Liberals have now delivered their ninth straight deficit budget.
“It’s amazing to me that anyone would be proud of that,” Pettapiece stated in a Feb. 26 press release. “It’s as if the Liberals have lost touch with reality.”
Wellington-Halton Hills MPP Ted Arnott said he is “deeply disappointed” with consecutive deficits and the growing provincial debt.
“The continued addition to the debt should concern all of us,” Arnott told the Advertiser. “Right now the cost of servicing the debt is the third largest item in the budget … behind only health and education.”
Arnott added “every man, woman and child who lives in Ontario is on the hook for $22,103 of the provincial debt.”
Help for students
One of the “signature” items in the budget, according to Matthews, is free tuition for students whose family income is less than $50,000 a year.
More than half of students from families making $83,000 or less a year will get grants that will exceed their tuition.
It will “completely transform … our student assistance program into one that will provide up front, clear, transparent information to students about how much financial aid they will receive,” Matthews said.
She explained the government will find funding by eliminating tax credits that can be claimed for years after graduation.
“People will know exactly how much (in) grants they will get, how much (in) loan(s) they will get and they will actually get a bill that will show their net tuition,” she said.
NDP Leader Andrea Horwath has expressed concern the budget includes a $430-million cut to education spending.
Municipal funding
Deputy Premier Matthews said most rural municipalities will experience the highest impact when it comes to infrastructure funding.
The Connecting Links program, which helps municipalities with construction and repair costs for roads that connect provincial highways through a community, will provide $20 million in 2016-17, up from $15 million announced in the 2015 budget.
The funding will increase to $30 million per year by 2018-19.
The budget also triples the Ontario Community Infrastructure Fund (OCIF), from $100 million to $300 million per year by 2018-19, with $200 million in predictable, formula-based funding and $100 million in application-based funding to be made available.
“This is exactly what those small municipalities, populations under 100,000, have been asking for,” said Matthews.
Arnott said the government was asked to reinstate the Connecting Links program “… after they cancelled it arbitrarily” a few years ago.
He said he is pleased Connecting Links funding is increasing but noted there will be a catch-up period because the two-year gap during which the program did not exist resulted in a backlog of work.
Arnott specifically mentioned the St. David Street bridge in Fergus as one project that requires Connecting Links funding. He noted “most of the traffic coming through Fergus is provincial traffic from Highway 6 at the south end of town to Highway 6 at the north.
“I hope with a slightly larger pool of money in the Connecting Links program, it will enhance the chance of securing funding for this project.”
As to potential increases in Ontario Community Infrastructure Funding, Arnott said “there is no question our local municipalities need provincial government support for many of their basic infrastructure needs and projects.”
Local municipal politicians were pleased with the announcement of additional infrastructure funding in the budget.
At the Feb. 25 Wellington County council meeting, Warden George Bridge noted municipalities have been asking for some time for an increase in predictable, formula-based funding, as opposed to application-based grants.
“I think the government is finally starting to get that message,” Bridge said. “I think with the work that AMO (the Association of Municipalities of Ontario) and ROMA (the Rural Ontario Municipal Association) and everyone else has been doing, including ourselves, some of this stuff is coming through.”
He added, “We’re getting an uptick in the Connecting Links – we got it back recently – it’s not enough but I’m pleased to see them moving off some of these grant processes and moving to sustainability. I think it’s a fairer system to go that way.”
County councillor Chris White, a member of AMO’s board of directors, said, “AMO and ROMA have been asking for this sustainable funding for years and considering the province’s fiscal situation they could have froze it, they could have pulled it back.”
He suggested the county send a letter to provincial officials, commending them for the move.
“We will give them a positive letter,” agreed Bridge.
Cap-and-trade plan
One item in the 2016 budget that has generated much debate is $1.9 billion in revenue from a new carbon-pricing plan, with proceeds to help fight climate change.
The plan is to increase gasoline prices 4.3 cents per litre next year and also to raise natural gas rates by 3.3 cents per cubic metre (officials say that is the equivalent of $5 on an average residential monthly bill).
“Cap and trade puts a price on pollutants, a price on greenhouse gas and we’re using every penny of the revenue generated from cap and trade to further reduce greenhouse gas emissions,” Matthews explained.
One of the funded initiatives will be a $100 million investment into home energy retrofits, including furnaces, windows and insulation.
Pettapiece called the carbon-pricing plan “nothing more than a tax hike in disguise,” adding the government is “desperate to repair years of waste and mismanagement.”
He added, “Unfortunately, those already struggling with skyrocketing energy costs will be hardest hit.”
Arnott called the increase in gas and natural gas costs “substantial,” adding, “Already gasoline is taxed 14.7 cents/litre plus HST.”
He said, “Right now with gas prices relatively low, I think the province believes people won’t notice the new tax brought in.”
Private-sector estimates show the long-term impact of the energy cost increases on families will be higher than the government has predicted. Some analysts project gasoline costs will increase by $400 a year and natural gas costs will increase by over $400.
Rural issues
Arnott said he is concerned with cutbacks under the Ministry of Agriculture, Food and Rural Affairs.
This year, the OMAFRA budget is being cut by $27 million, which he said was not covered in early budget stories.
“It will impact the ministry’s ability to support rural and farm family needs,” said Arnott.
For Pettapiece, the budget does little to address other rural issues.
“It does none of the things we asked the government to do: bring in a credible plan for affordable hydro, ensure proper management of Ontario’s health care system, or provide a credible plan to balance the budget,” he stated.
Matthews addressed criticism from opposition members that hydro needs to be more affordable.
“When it comes to electricity prices I keep hoping I’m going to hear a plan from the opposition about what they would do to bring down electricity prices,” said Matthews.
“We believe that people should pay for the electricity that they use, that electricity should not be subsidized by the general taxpayers, that people should pay their electricity costs.”
Matthews also said the government has increased the health care budget by $1 billion and increased hospital base budgets for the first time in four years.
However, she said the focus is on delivering services outside the hospital setting.
“We will continue to invest more in community care because we still have too many people in hospital who could be cared for at home, who want to get home but need those services at home,” said Matthews.
Seniors
The 2016 budget boosts the annual deductible rate from $100 to $170 on public drug benefits for some seniors. However, another 170,000 low-income seniors will pay less for prescription medications. Shingles vaccinations will be free for those between the ages of 65 and 70, saving them $170.
Arnott said seniors will feel the impact of this year’s budget and “pay considerably more for the medications they need.”
Other highlights
Other highly-publicized items in the budget include:
– a $25-per-month increase for singles on Ontario Works and a 1.5 per cent hike for others relying upon Ontario Works and the Ontario Disability Support Program;
– a tax increase of $3 a carton of 200 cigarettes with future tobacco hikes indexed to inflation;
– increasing wine taxes by an average of 10 cents a bottle (part of expanding sales in supermarkets);
– getting rid of a tax credit designed to encourage seniors to renovate their homes so they can stay in them longer;
– scrapping the children’s activity tax credit, which gave families an average of $70 for sports, arts and cultural programs for their kids; and
– eliminating the $30 Drive Clean fee for emissions testing for older vehicles.
More information about the 2016 provincial budget is available at http://www.fin.gov.on.ca.
