Province’s plans to wipe out deficit could be too optimistic, former MP says

yorkregion.com
Feb. 26, 2016
By Lisa Queen

With the provincial government’s debt topping the $300-billion mark for the first time in history and a deficit of $5.7 billion marking the ninth straight year of Ontario’s financial books being in the red, Bryon Wilfert is worried.

Wilfert, chair of the board of the Richmond Hill Chamber of Commerce, is a former York Region Liberal MP who served as Parliamentary secretary to the minister of finance twice during his time in Ottawa.

After hearing details about this year’s provincial budget delivered Thursday afternoon, he’s not sure he shares Ontario Finance Minister Charles Sousa’s optimism about the economy.

Sousa has promised to eliminate the provincial deficit next year.

While Wilfert applauds the goal, he is skeptical of Sousa’s rosy economic projections needed to achieve that.

If there is a continued downturn in the Canadian economy or a crisis, such as a nosedive of the U.S. economy or a hike in interest rates, the province won’t be able to meet its goal of eliminating the deficit, he said.

“The trajectory of the government’s forecast is based on a projected growth rate over the next four years of around five per cent. I think we’ve only reached that once in the last five years. They obviously are being optimistic, to say the least,” he said.

“It’s very easy to get into a deficit and extremely difficult to get out.”

While Wilfert supports some of the Premier Kathleen Wynne’s budget initiatives, such as $160-billion investment in infrastructure over 12 years and free tuition for low-income students, he would have preferred to see the government tackle its financial problems more actively first.

“Ultimately, who pays for all this? Governing is about priorities. I know that very well,” he said.

“The budget is almost give with one hand and take with the other.”

Highlights of the budget include:

• A surprising restructuring of funding post-secondary education. Beginning in the 2017-18 school year, students from families with incomes of less than $50,000 will get free tuition. The new system, which aims to streamline the current system of confusing system of grants, loans and rebates, will also include ensuring 50 per cent of students from families making less than $83,000 a year will receive non-repayable grants exceeding the average cost of college or university tuition. Debt levels will be capped at $10,000 a year for higher income families.
• The province is also investing $3 billion in capital grants over 10 years to post-secondary institutions. In York Region, this funding will go toward the new York University and Seneca College campus in Markham.
• Increases of 4.3 cents a litre for gas and $5 a month for residential natural gas bills as part of the province’s cap-and-trade carbon program to help eliminate greenhouse emissions.
• A reduction in residential electricity bills of $2 a month, thanks to cap-and-trade.
• A boost in the tobacco tax rate by $3 a carton beginning Friday. Tobacco taxes will also increase by the rate of inflation over the next five years beginning in 2017.
• A bottle of wine will cost at least $7.95 by 2019. Also, wine sold through the LCBO will jump 10 cents on $7.95 a bottle, 15 cents on a $13.95 bottle, 35 cents on a $29.95 bottle beginning in June. Wine will eventually be sold in 300 grocery stores.
• Elimination of the $30 Drive Clean fee.
• An increase of social assistance benefits of 1.5 per cent.

As she met with customers of the Coffee Culture shop in Bradford Friday morning, York-Simcoe Conservative MPP Julia Munro slammed the budget.

“I’m disappointed that the government rushed to release this budget, as I was hoping they would take the time to consult everyone in Ontario,” she said.

“We had set three main priorities: energy costs, managed healthcare and debt. We were looking in the budget for any items that reflect those but our recommendations were not included. When it comes to health care, firing nurses across the province is obviously not good health care management. For those who will be receiving free tuition, I give kudos to them but it is a smaller number of people that will benefit from such a thing.”

However, Transportation Minister Steven Del Duca, MPP for Vaughan, said the budget delivers good news.

“I think this is a great budget, it’s a great budget for York Region and the Greater Toronto and Hamilton Area and all of Ontario because the budget is really about the economy and job creation and creating opportunities through crucial investments, particularly in infrastructure, that will help spur that job creation and keep our economy moving forward and also improve the quality of life for residents in York Region and beyond,” he said.

“So, I’m very proud of it. It’s a great road map.”

The province is investing $160 billion in infrastructure over the next 12 years, including $12 billion in hospital capital projects and $11 billion in school capital projects, Del Duca said.

In York Region, that will include a seven-kilometre extension of Hwy. 427, which will begin next year and wrap up in 2020, and the addition of high occupancy vehicle (HOV) lanes on Hwy. 400 from Major Mackenzie Drive to King Road, he said.

The province’s investment in infrastructure will create 110,000 jobs across the province each year over the next decade, Del Duca said.

“One of the big challenges, of course, that we have in York Region and across the GTA is that for more than a generation, all levels of governments under-invested in infrastructure,” he said, adding his government is now providing stable, annual infrastructure funding.

Those investments will also stimulate the economy, which will allow the government to eliminate the deficit and begin tacking the debt, he said.

“My message is this is a budget that significantly supports York Region middle-class families and those that aspire to be in the middle class,” he said.

“It’s about job creation, it’s about a strong economy and it’s about having the kind of critical infrastructure we all need and we all deserve to support a quality of life in the future.”

Not surprisingly, the region’s other Liberal MPPs, Newmarket-Aurora MPP Chris Ballard, Markham-Unionville MPP Michael Chan, Oak Ridges-Markham MPP Helena Jaczek and Richmond Hill MPP Reza Moridi, also praised the budget’s investments in infrastructure, health care and students.

Newmarket Chamber of Commerce president, Debra Scott, commended the government for addressing business concerns with the cap-and-trade system.

Last year, the Ontario Chamber of Commerce called on the government to invest in cap-and-trade proceeds in a way that helps business in the transition to a lower-carbon economy.

The business community is eager to help shape how the $1.9 billion in proceeds are spent.

At the same time, as the province moves closer to fiscal balance next year, the Newmarket chamber is worried it may not be able to eliminate the deficit without transforming its delivery of services.

York University president Mamdouh Shoukri applauded the province for boosting access to post-secondary education and for its commitment to the York-Seneca campus in Markham.

York Region is one of Canada’s fastest-growing communities and is at the heart of Ontario’s knowledge economy, he said.

The Ontario Hospital Association called the budget good news for the province’s health care system.

“Today’s investment will go to support frontline care and help to keep wait times low, maintain access to elective surgery and ensure that important health service programs are maintained,” president Anthony Dale said.

The health care system is undergoing a period of intense transformation and hospitals are under enormous pressure to do more with less funding, he said.

“After four years without an increase in base operating funding, this is a welcome announcement for patient care and will protect the gains that have been made with respect to access and frontline services,” he said.

Meanwhile, the Registered Nurses Association of Ontario praised the government’s commitment to better compensate nurse practitioners, who haven’t had a pay increase in nine years.

The association also supports the government’s investments in palliative care and long-term care homes treating residents with dementia and other behavioural needs.

But it gave a “thumbs down” to the sale of alcohol in grocery stores, saying the move puts could encourage more drinking.