Yesterday Kathleen Wynne released what amounts to a typically pre-election budget. I have a real problem with a government calling their budget balanced when provincial debt will still rise by 21% over the next 3 years because of interest payments. I know when hard working Ontarian’s budget their households they have to include covering these items or risk being further in debt and many have no choice but to reduce debt by paying principal as lenders require them to.
I watched the celebrations as they announced the budget with despair. The debt we will leave for future generations is a far greater issue than throwing a couple hundred million at youth programs over 3 years. First of all the numbers are risky. There is no room for error in their calculation at a time when there needs to be. We’re looking at possible changes in NAFTA for example. The province counts on a huge lift from land transfer taxes at a time when the rest of the world is saying Ontario is due for a real estate crash. That would be an obvious reduction in revenues. Where’s the room for contingency?
Basic economics also says if the economic rate of growth does rise eventually so too will interest rate risk. There is no plan to budget a surplus or any reduction of the $332billion dollar debt the province is running, amongst the highest per capita not in the third world. There were spends like the youth drug program that were not asked for or really needed and don’t address the real pharma issues in the province and the country. This government parked it’s CIT, corporate income tax credit program that would have reduced corporate income tax putting $47 billion in spending back into Ontario and creating 600,000 more jobs something that would have been a net positive for them with no cost. Ignored again! Combined with the feds change in dividend rates and its easy to see why companies would leave Ontario.
Specific transit needs in the GTA are not fully addressed and the current and previous infrastructure seems to take eons to get rolled out and improvements are being outpaced by growth. Not only do all 3 levels of government need to work together to fund this, they need to get together and do a better job of planning it. Workers in the GTA are looking at staggered hours to be able to move in the city, very difficult to arrange families and daycare around that. Business is simply moving out of the core opting for areas with easier access and parking.
One real positive was monies aimed at improving hospital spending and care, an area where Canada’s largest province was lagging well behind its peers. On the healthcare front though the youth drug initiative is a lot of smoke and mirrors. They will only be covering a small percentage of scripts and most of these youth are covered while in school to age 25 under their parents work benefits programs already. For those that don’t they have mostly minimal expenses and trillium is already in place for youth without plans that require help for more expensive scripts. Why do this, no one was asking for it. The bigger issue is pharma costs in Ontario and Canada. More work on lower and consistent drug costs would have saved Ontarian’s far more money on their drug and healthcare costs.
Affordable housing is always needed so anything there is a plus. Rent control can be problematic with the resulting run down rental units left behind. The foreign buyers tax does not go far enough. If speculation is part of the cause of making homes unaffordable for our youth and a large percentage is from offshore funds more rigid rules need to apply. We assume this will work because they will file a tax return and pay the tax, this is not always going to be the case and needs to be more heavily policed.
One of the saving graces for the province is our demographics. Housing will come down as boomers will be starting to downsize and need buyers. The next gen’s can’t afford to buy near the city at current prices. The two sides will eventually have to meet. Boomers retiring will actually create a shortfall of workers, particularly skilled in the next decade. More focus on trades education should be taking place. Youth unemployment will go down as those jobs become available and if there’s enough focus on technology education for the echo generation their lower numbers will be partially offset by technology improvements.
Utilities is still a nightmare, particularly electricity. Reducing rates by expanding the debts payment period caused by mismanagement is another example of this government robbing Peter to pay Paul. Our utilities are simply poorly managed and that needs to be addressed. An electricity rich province shouldn’t have costs way beyond provinces and states that need to import hydro. It’s causing businesses to leave and reducing household cashflow that could be spent on other items.
My concern is that this budget is like the family that is running paycheque to paycheque. They get excited because they get a new credit card and now have more room to spend before exceeding their limits. The core issue is debt and prioritizing spend and creating some efficiencies within your own network to reduce overhead. Ontario has done little to work on its core issues with this budget and is more concerned with re-election than the long term welfare of the province. This is very disappointing. We couldn’t run our households or our businesses like this, why can our elected officials do it?