Province unveils $130B infrastructure push in Ontario budget

The finance minister tabled his $131.9-billion spending plan with an $8.5-billion deficit.

Thestar.com
April 23, 2015
By Robert Benzie

The road to a balanced budget will be lined with transit stops, but there could be some bumps along the way.

Finance Minister Charles Sousa’s budget Thursday spelled out a massive 10-year, $130-billion infrastructure push fuelled by supermarket beer sales, a sell-off of Hydro One, and flatlined spending.

Saddled with a budget shortfall he hopes to eliminate in 2017-18 - in time for the October 2018 provincial election - Sousa said average annual increases on health and education must be limited to 1.9 per cent and 2 per cent respectively over the next few years.

Overall spending on other services - except justice and children and youth services - will be cut by 5.5 per cent, though no public service jobs will be eliminated. Some of the reductions will come from time-limited expenditures such as this summer’s Pan Am Games, which are already funded.

Sousa said Premier Kathleen Wynne’s Liberals - re-elected last June with a majority - are “building Ontario up” by finally addressing the need for transit, highways, bridges, waterworks, and hospitals.

Key highlights of the 2015 Ontario budget

• $130 billion budgeted for infrastructure over 10 years
• Budget projected to be balanced by 2018
• Beer to be sold in 450 supermarkets
• New 3 cents-a-litre beer tax starts in fall
• 60-percent sell-off of Hydro One
• Insurance discount on motorists who use snow tires

What the 2015 budget means for you

“This will be one of the largest infrastructure investments in Canada since the Last Spike was driven, completing the Canadian Pacific Railway,” Sousa told the legislature as he tabled a $131.9-billion spending plan with an $8.5-billion deficit.

“Right now, gridlock is choking our growth potential. This is not a ‘Toronto traffic’ problem - everyone from Bowmanville to Brampton to Burlington knows how hard it is to get across the Greater Toronto and Hamilton Area in rush hour,” said the Mississauga South MPP.

“Gridlock costs our economy up to $11 billion per year in the GTHA alone. Government after government has delayed investing in infrastructure. We can’t afford any more delays,” he said of a decade-long effort that should create 110,000 jobs.

Sousa said former TD Bank CEO Ed Clark’s panel on privatization and monetizing government assets, which last Thursday recommended grocery beer sales and selling 60 per cent of Hydro One, was key to bankrolling the historic expansion.

That includes previously announced improved GO and TTC services, a new Hurontario LRT linking Mississauga and Brampton, extending Hwy. 407 from Brock Road in Pickering to Oshawa’s Harmony Road, which will open later this year, and one-third of the funding for Toronto Mayor John Tory’s SmartTrack surface rail system.

Budget shortfall

Sousa said “managing compensation costs” for the 1.2 million employees on the public payroll along with reviewing and modernizing government programs are crucial to balancing the books.

“Every program is being examined with fresh eyes ... is it still relevant? Is it effective? Is it efficient and is it sustainable?”

But that could trigger further labour unrest beyond the secondary school teachers now striking in Durham with more boards on the cusp of job action and other public servants sabre-rattling after years of frozen wages.

Indeed, one of the biggest savings in the budget is from decreasing public sector pension costs thanks to reforms to retirement benefits and the wage freeze. In 2015-16, the pension outlay will be $1.9 billion less than had been forecast in 2012.

No major tax hikes

There are no tax hikes in the budget other than a three cents a litre beer charge starting this November. That will increase three cents per litre per year until 2018, the equivalent of a penny a bottle hike annually. That will bring in $100 million to the province’s thirsty coffers.

The expansion of wine sales in supermarkets will have to wait for another report from Clark’s panel that will be delivered by the end of the summer.

Ontario’s debt will rise to $298.9 billion next year, but, propelled by low oil prices and a weaker Canadian dollar against the U.S. greenback, the government predicts the economy will grow by 2.7 per cent.

Still, the amount owed by every man, woman, and child in the province has skyrocketed under the Liberals from $12,142 in 2006-07 to $21,642 this year.

“Since the recessionary low in June 2009, Ontario’s employment is up by more than 500,000 net new jobs, more than recovering our jobs lost,” crowed Sousa.

“In fact, three-quarters of these new jobs are in sectors that pay above-average wages (and) more than 83 per cent are in the private sector and 94 per cent are full time,” he said.

But interim Progressive Conservative leader Jim Wilson, whose party has long called for more austerity measures, said the Liberal spending spree is not sustainable, noting “interest on the debt is the highest growth area in this budget - an average annual increase of 5.7 per cent.”

“That’s higher than education, higher than on health and yet there’s no plan to deal with the debt. It’s just going up and up,” he told reporters in the budget lock-up.

Wilson predicted the government - with debt-rating agencies breathing down its neck - will foist “future tax increases” on Ontarians.

NDP Leader Andrea Horwath warned the Liberal budget actually “weakens social services” because funding is not keeping up with inflation.

“Ontarians didn’t vote for a platform of cuts and privatization,” said Horwath, whose refusal to prop up the then minority Liberals’ May 1, 2014 budget triggered the election last June 12.

“This budget cuts education and closes schools, cuts health care and fires nurses,” she said, adding further labour strife looms.

“It is bad for Ontarians.”