Ford gov’t says deficit reduced to $14.5B with new suite of cost-cutting measures

Fedeli unveils 2018 Fall Economic Statement Finance Minister Vic Fedeli said the new cost-cutting measures introduced in the Fall Economic Statement will reduce the deficit.

Embattled Finance Minister Vic Fedeli's first Fall Economic Statement begins to whittle down Ontario's deficit of $14.5 billion but opposition parties say it has serious implications for housing affordability, legislative oversight and the future of political fundraising.

"We were able to lower the deficit by $500 million in just a few weeks," Fedeli told reporters Thursday.

The Ford government is introducing a new tax credit that will exempt minimum wage earners from provincial income tax and says its cost-cutting measures have reduced the 2018 deficit by $500 million.

But he suggested eliminating the deficit will be a stubborn task.

"It's a real deficit. It's not a made-up number. We will look for anything and everything that offers value to Ontario taxpayers," saying the budget would be balanced in a "responsible way" and with a commitment to Premier Doug Ford's edict that no public servants lose their jobs.

Tax credit offered to minimum wage earners

The new Low-income Families and Individuals Credit that will save a minimum wage earner up to $850 per year and minimum wage-earning families up to $1,700 per year.

This is less than what low-wage workers would have taken home if the Ford had not cancelled a planned increase in the minimum wage from $14 to $15 per hour, which was set to take effect in January.

The 15 and Fairness campaign said Thursday that a minimum wage earner working fulltime in Ontario will forego about $1,900 in income as a result of the cancellation of the raise.

NDP Leader Andrea Horwath went even further, pointing out most minimum wage earners work part-time.

"Two-thirds of them don't even earn enough to pay (provincial income) taxes in the first place," she said.

The tax credit phases out once a tax filing household's income hits $68,500. The move will cost the government $125 million between January 2019 and March 31 of that year.

Fedeli has also scrapped a tax increase implemented by the Liberals in their final budget last March, raising personal income taxes for everyone earning more than $70,000, by an average of $200.

Freezing public sector hiring, ending cap and trade and a raft of other measures has saved the province $3.2 billion, lowering the deficit to $14.5 billion.

Interim Liberal Leader John Fraser said the PCs are using the size of the deficit to justify further cuts.

"The government is intentionally inflating the deficit to create a pretext for cuts. Deep cuts."

Rent control exemptions

With one sentence buried in the 155-page document Ford government is exempting all new rental housing from any rent controls if they were "first occupied after today."

Rental units already occupied prior to Thursday will be covered by rent controls limiting increases to the rate of inflation.

Officials in the technical briefing provided to reporters could not specify if the measure was specifically for newly-built rental housing or newly-occupied rental housing.

Fedeli told reporters "everybody who is an existing tenant today is protected," and that the rules continue to cover all "existing buildings."

But according to the text of the legislation tabled Thursday, if a landlord creates a new rental unit in an existing detached home or townhome after Thursday, it will also be exempt from rent controls.

The province claims the move will spur new purpose-built rental construction in the housing-starved GTA area but it will also send average rents in many cities skyrocketing.

"The number one thing we can do to increase supply is open up the market," Fedeli said of the rent control exemption.

Horwath countered that the housing market is firing on all cylinders already and removing rent controls will not spur new rental housing construction.

"You can't look anywhere out of this building without seeing many, many cranes in the air," she said. "The issue isn't the units, it's the affordability of those units."

Fedeli dogged by allegations

While speaking with reporters, Fedeli was repeatedly questioned about allegation made in former PC leader Patrick Brown's soon-to-be-released book.

Brown says in that book that Fedeli was accused of sexual misconduct by a party staffer in Dec. 2017.

Ford has dismissed the allegation as a malicious smear.

Fedeli said Thursday he has "held himself to a high ethical standard" throughout his career and said he is preparing a possible legal response.

"I have retained counsel and I will take any action that is necessary to hold any person making these false accusations to account," Fedeli said.

While NDP leader Andrea Horwath has asked that he step aside while an independent investigation is conducted, Ford has refused.

Members of the PC caucus were seen wearing yellow ties or scarves, in reference to Fedeli's signature yellow necktie, in the legislature Thursday morning as a sign of support.

The allegations have not been tested in a court.

Other changes outlined in the fall economic update

In a prelude to putting beer and wine in corner stores, the Ford government is extending the hours LCBO and Beer Store outlets can opt to be open. The stores will be allowed to sell alcohol from 9 a.m. to 11 p.m., Monday to Sunday.

Queen's Park itself is also going through changes, as the PCs say they will gradually eliminate the per-vote subsidy offered to political parties between now and 2022.

Instead of the per-vote subsidy, the annual political donation limit will rise to $1,600 per year, per person and ministers and their staff will again be allowed to attend glitzy fundraisers, something the Liberals put a stop to after much public outcry.

"This will take (the funding) burden off of the people of Ontario," Fedeli said, pointing out his changes align Ontario's political fundraising rules with the federal ones.

Horwath countered that the changes make Ontario more like the United States.

"It slides us closer and closer to the American model where people with money get to change the tone of government."

Also, the legislature's nine officers are being cut down to six.

The French Language Services Commissioner is being folded into the Ontario Ombudsman's office, and the Environmental Commissioner is being folded into the Office of the Auditor General. The Provincial Advocate for Children and Youth will also now be overseen by the Ontario Ombudsman's office.

For his part, Irwin Elman, Ontario's now-outgoing Child and Youth Advocate, said he was not warned in advance of the closure of his office.

"I find it shocking that I learned through the media this morning of this government’s plan to repeal the legislation that governs the work of the Ontario Child Advocate. I received no official notice or briefing," he said in a statement published 90 minutes after the fall economic statement was first tabled.

"This government must pause, consult and reconsider its plan."