April 29, 2022
Market Trends
RYPM
Ontario’s
Progressive Conservatives are veering off a path to balance with an election
budget loaded with billions of dollars in hospital, highway and transit
investments.
The document, set to serve as the Tory platform during
a campaign expected to kick off next week, has the party projecting Ontario
will be $19.9 billion in the red this year – a bigger deficit than the province
ran in the first pandemic year. The Progressive Conservatives aren’t planning
to balance until 2027-28.
That’s despite Ontario’s Financial Accountability
Office saying recently that the province was on track to balance the budget by
next year.
Finance Minister Peter Bethlenfalvy defended the
deficit and the whopping $198.6 billion budget, saying now is the time to
invest and rebuild.
“Sparing no expense during the pandemic was the right
thing to do,” he said.
“Rebuilding Ontario’s economy today is the right thing
to do in a fiscally responsible way, which we demonstrated in this budget.”
The legislature adjourned until Sept. 12 after the
record spending plan was tabled, meaning it will not be passed before the
election campaign is expected to officially begin on May 4th. Bethlenfalvy
wouldn’t confirm when repeatedly asked, that the Tories would reintroduce the
same budget if re-elected, but Premier Doug Ford’s staff later said they would.
NDP Leader Andrea Horwath accused the Progressive
Conservatives of presenting a “bait and switch” budget and said they would
introduce cuts if re-elected.
“Doug Ford is going to go right back to cutting the
minute this election is over if we give him the chance,” she said.
In the Tory government’s pre-pandemic life, it was
focused on tightening purse strings – with “finding efficiencies” a key 2018
campaign refrain – and it came under sharp fire in 2019 when that year’s budget
made sweeping program cuts that were only revealed following the tabling of the
document.
The government had also managed to chip away at a
large deficit necessitated by COVID-19 spending in the first year of the
pandemic, lowering it from $16.4 billion in 2020-2021 to $13.5 billion in
2021-22. Those amounts also came in well under initial projections.
But now, the Tories are planning to sink the province
further into deficit, with program spending growing by an average of 5.1
percent for the next three years, higher than the 4.2 percent average of the
past 10 years. It’s fuelled in large part by major funding commitments for
infrastructure.
The government has pledged $158.8 billion over 10
years for projects such as hospitals, highways and transit, including $20
billion this year alone.
In the weeks leading up to the introduction of the
budget, the government announced more than $2 billion in funding for various
hospital projects and a plan to spend $1 billion over three years on home care.
Proposed highway projects announced in the budget
include a new twin bridge over the Welland Canal on the Queen Elizabeth Way,
widening Highway 401 in eastern Ontario starting in Pickering, Ont., and
Oshawa, Ont., widening Highway 17 from Arnprior, Ont., to Renfrew, Ont., and
reconstructing a stretch of Highway 101 in northern Ontario.
The document contains a few new pocketbook goodies,
especially compared to the party’s 2018 platform, which promised lower hydro
bills, an income tax cut, lower gas prices and buck-a-beer – though not all of
those were accomplished.
A budget section on “keeping costs down” is largely
built on previously announced measures, including cutting the gas tax by 5.7
cents a liter for six months starting July 1, expected to cost $645 million,
reaching a deal with the federal government to provide $10-a-day on average
child care by 2025, and eliminating and refunding license plate renewal fees
back to March 2020, at a cost of $1.8 billion.
Two new affordability measures are a proposed Ontario
Seniors Care at Home Tax Credit, which will give recipients up to 25 percent of
eligible medical expenses back up to a maximum of $1,500, and an enhancement of
Ontario’s Low-income Individuals and Families Tax Credit.
The Tories propose to raise the amount under the
low-income tax credit from a maximum of $850 to $875 and allow more people to
qualify. Currently, the benefit is phased out at a rate of 10 percent for an
individual’s income above $30,000 up to $38,000 and the government proposes to
lower that phase-out rate to five percent, which would see people making up to
$50,000 qualify.
It is estimated that 1.1 million lower-income workers
would see an additional average of $300 in tax relief for 2022, with the
measure expected to cost an additional $320 million.
The Tories also propose to extend film and television
tax credits to online productions.
Liberal Leader Steven Del Duca said Ontarians will
find the budget disappointing.
“This document is completely lacking in the kind of
ambition that I know that the people of Ontario have for our province and want
to see for the future of our province,” he said.
Green Party Leader Mike Schreiner said this is “a
pro-sprawl, anti-climate budget” that will undermine the protected Greenbelt by
running highways through it.
Bethlenfalvy touted a previously announced plan to invest in mining critical minerals in the north to provide materials for electric vehicle batteries manufactured in the south of the province.
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