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Ontario Budget Preview

On Thursday, Ontario Premier Kathleen Wynne delivers her penultimate budget before next year’s election – one that will determine the future of her Liberal majority government.

Some observers are calling it her “last chance” budget.

Ms. Wynne’s popularity among Ontarians is at an all-time low; her government is under attack for its partial privatization of Hydro One as residents, especially those in rural Ontario, are seeing their hydro bills grow and grow.

So angry are Ontarians over hydro rates that late last year, Ms. Wynne apologized, calling increasing hydro rates her “mistake.”

The healthcare system is underfunded; doctors are upset over their compensation, and the Wynne government has spent more than a few months at war with Ontario’s teachers.

In addition, there is the fatigue factor with the Liberals, who have been in power since 2003. Ms. Wynne’s government took over in 2013 – and was elected with a majority in 2014.

Ms. Wynne is promising to deliver a balanced budget this year, but given spending pressures and government promises it feels like a tall order.

Budget 2017 is Ms. Wynne’s chance to begin making her case for re-election. She will have one more budget before next year’s election set for June 7 – unless, she is forced out or steps aside, as some observers are predicting.

So here’s what to look for on Thursday:
 

Balance


Ontarians can expect Ms. Wynne and her finance minister, Charles Sousa, to make good on their promise to balance the books this year, after nine straight deficits. How they get to balance will be carefully scrutinized, given the spending promises already made. Opposition parties and observers are suggesting that the balancing act is artificial and temporary. The official opposition Progressive Conservatives have charged that balance will be achieved by one-time asset sales. The Fraser Institute has noted that federal transfer payments have grown, giving the Liberals room to manoeuver, but this growth is unlikely to continue. As well, interest rates may rise – and there is pressure on the Liberals for new spending as the election approaches.
 

Debt


Pay attention to how Ms. Wynne and Mr. Sousa treat Ontario’s debt, which is among the largest of a sub- national government in the world. The provincial debt was at $156.6 billion in 2007 – 2008. As the Fraser Institute notes, it is expected to increase to $317.9 billion in 2016 – 2017.
 

Heathcare


The Wynne government is promising a “major booster shot” for healthcare after keeping tight control of its healthcare spending for the past five years. As the Globe and Mail reported in January, “Ontario has controlled health spending largely by focusing on hospitals and doctors. The province froze base operating funding for hospitals for four years before increasing it by 1 per cent in the last budget.” Last week, Ms. Wynne met with officials at Ottawa’s Children’s Hospital of Eastern Ontario, acknowledging that “hospitals in Ontario need more financial support and in the budget, you will see this assistance. At this moment, I cannot give specific details on specific figures or areas of focus. But we have listened to the people of Ontario,” she said. The Toronto Star recently reported wait times for patients in emergency rooms have hit peak levels, and hospitals are struggling to deal with an overflow of patients.
 

Hydro


In 2015, the Wynne government announced it would sell 60 per cent of Hydro One to raise $4 billion for transit funding. It was controversial at the time, and remains one of the government’s most unpopular decisions. Polls have shown huge opposition to the sale and expectations that it will only contribute to even higher hydro bills. Last November at her party’s annual general meeting, Ms. Wynne apologized for high hydro rates. In March, the government cut rates by 17 per cent as a way of providing relief to ratepayers. This was on top of the eight per cent HST However, the consequence of the rate cut is an estimated $1.4 billion per year in added interest costs, which will be borne by ratepayers on future hydro bills.
 

Housing


One of the biggest preoccupations of the Wynne government has been with housing prices, especially in the Greater Toronto and Hamilton Area (GTHA). The government did not wait for the budget to announce measures it believes will deal with the affordability crisis. Last week, it outlined a 16-point housing plan, which included a 15-per-cent tax on foreign buyers, a special tax for vacant homes and more controversially, an expansion of rent controls. Critics are concerned that there is no data to back up the housing measures, and the rent controls will reduce supply of rental properties, further exacerbating the housing issues.
 

Additional Measures


Finance Minister Sousa has said there will be more funding for education, a transit tax credit for seniors and no new taxes for families.