Ontario Budget: Liberals make pitch to voters with 10-year plan
Andrea Janus , CTVNews.ca
Published Thursday, May 1, 2014 5:05AM EDT
Last Updated Thursday, May 1, 2014 4:39PM EDT
Ontario Premier Kathleen Wynne is bypassing the opposition parties and taking her vision for the province right to voters, with a budget that outlines a sweeping 10-year plan aimed at fixing crumbling infrastructure while helping low- and middle-income earners.
The biggest items, already released in a series of pre-budget announcements, are all there: $29 billion over 10 years for transportation infrastructure, more than $11 billion over 10 years to repair schools, more than $11.4 billion over 10 years to expand and refurbish the province’s hospitals, and a $2.5 billion, 10-year job-creation fund.
The budget does not include a personal income tax increase for low- and middle-income earners, a hike in the HST or fuel taxes, or a boost in education property taxes to pay for these promises.
But it does contain some $900 million in new taxes, including:
- A personal income tax hike for the top two per cent of Ontario workers, which equals about 220,000 people. Under the proposed plan, the income threshold for the top tax rate of 13.16 per cent will be lowered from $514,090 to $220,000. This means Ontarians who earn more than $220,000 will pay $5,500 more in income tax.
- The income tax rate will rise from 11.16 per cent to 12.16 per cent for workers earning between $150,000 and $220,000 per year, adding $425 to what they pay annually.
- Smokers will also be paying more for cigarettes. The cost of a carton is going up by $3.25 cents, and the change comes into effect immediately: midnight Thursday.
But the minority Liberal government is also appealing for Ontarians’ support with measures to put more money in low-income earners’ wallets and give middle-income earners the opportunity to save more for retirement.
The minimum wage will rise from $10.25 to $11 on June 1, and future increases will be tied to inflation. The government will also increase wages for:
Front-line childcare workers by $1 in 2015 and another $1 in 2016;
Personal support workers, who provide in-home care to the elderly and the ill, by $1.50 in 2014-15, another $1.50 in 2015-16 and another $1 in 2016-17. The increases would bring the base wage for PSWs to $16.50 an hour by 2017.
Other previously announced measures include removing the Debt Retirement Charge from electricity bills starting in January 2016, a move that will save ratepayers about $70 per year, as well as a hike in the annual Ontario Child Benefit to $1,310 on July 1. Going forward, increases to the child benefit will be tied to the rate of inflation.
The province is also committed to going it alone on pension reform by introducing the Ontario Retirement Pension Plan, which would offer additional pension coverage for the three million Ontario workers who do not have a workplace pension program.
Finance Minister Charles Sousa said the budget makes “the necessary investments to grow our economy.”
The budget is “a long-term vision” for the province, he said Thursday afternoon, denying reporters’ questions about whether the document really serves as a campaign platform.
“This is not about election-cycle decisions, nor should it ever be,” Sousa said.
It remains unclear, however, whether the Liberals will indeed be running an election campaign on the budget’s promises, as NDP Leader Andrea Horwath, who has propped up the minority Liberals the last two years after negotiating budget concessions, was a no-show for reaction at the budget lock-up.
Horwath’s staff said the NDP will hold a press conference at Queen’s Park on Friday morning.
“I’m perplexed as to why the leader of the third party would not stand in front of Ontarians in terms of what we’re discussing today,” Sousa said. “They deserve to know where it is that they are at.”
Sousa would not say whether he was committed to putting the budget to a vote in legislature, or if the Liberals will pull the plug on their government first and send Ontarians to the polls.
“I will leave it to them as to what goes next,” Sousa said, referring to Horwath and Progressive Conservative Leader Tim Hudak. “I stand by this budget.”
As expected, Tim Hudak came out against the budget saying he has “a better plan.”
“All this is to me…is a budget that’s only focused on getting Liberal members re-elected,” Hudak said. “They are putting the concerns of Liberal politicians and Liberal insiders ahead of the concerns of real people.”
Asked if he would incorporate any of the initiatives for low-income workers into his own economic plan if he becomes premier, Hudak said he has not interesting in “tinkering with this plan.”
“There’s nothing in this budget that will create a single job,” Conservative finance critic Vic Fedeli said. “This is all about taxing and spending.”
Hudak said he’s “not interested in increasing taxes.
“I think taxes have to come down in this province if we’re going to create jobs.”
Thursday’s budget included a few more details about the highly touted $29 billion, 10-year program for transportation infrastructure across the province, with $15 billion allocated to the GTA and Hamilton area and $13.9 billion for the rest of the province.
The Liberals previously announced they would partially fund the program by redirecting some government revenue, including the 7.5 cents of the provincial gasoline tax and the HST from provincial taxes charged on gasoline and diesel.
The government also hopes to raise funds with a four-cents-per-litre tax increase on aviation fuel, selling yet-to-be-revealed government assets, and raking in fees from high occupancy toll lanes that have not yet been built.
The balance would be made up of the proceeds of the previously announced green bond program, as well as money the province hopes to get from the federal government via the Building Canada Fund.
Debt and deficit
The Liberals remain committed to balancing the budget by 2017-18, and project the deficit for 2013-14 to be about $11.3 billion, $400 million less than was projected in last year’s budget. The deficit will go up to $12.5 billion in 2014-15, but will drop to $8.9 billion in 2015-15 and then $5.3 billion in 2016-17.
The province’s net debt is $289 billion and is projected to climb over $305 billion in 2015-16 and above $317 billion in 2016-17. Interest on that debt will top $11 billion per year in 2014-15, the government projects.
The government predicts that GDP growth will double from 1.3 per cent in 2013 to 2.1 per cent in 2014, 2.5 per cent in each of 2015 and 2016, and hit 2.6 per cent by 2017.