Ontario’s Progressive Conservatives released their pre-election budget on Thursday, forecasting major infrastructure spending and promising tax breaks for some workers and seniors, while running deficits for the next few years.
Many of the key commitments contained in the 268-page document have already been announced by Premier Doug Ford’s government ahead of the impending election campaign, which is due to begin on May 4. There isn’t enough time to pass the budget before the Legislative Assembly dissolves next week, so the document serves as a costed platform for PCs.
Key themes of the CP financial plan include improving and expanding critical infrastructure, rebuilding the economy in the wake of COVID-19, helping families deal with the rising cost of living, and preparing the province for any new wave of the pandemic.
The budget was tabled at Queen’s Park by Finance Minister Peter Bethlenfalvy, who called it “Premier Ford’s vision for Ontario.”
“We have to rebuild this economy. We have to grow these jobs,” he told reporters.
When asked if PCs would table an identical budget if re-elected on June 2, Bethlenfalvy did not explicitly pledge to do so, but said it was the campaign platform. of the party and that it was up to the voters to accept it.
“We’re going to go through the election, we’re going to listen to Ontarians,” he said.
The deficit is expected to increase this year
The budget includes significantly revised deficit projections, with the government predicting a potential return to balance by 2027/2028, two years earlier than projected in the 2021 budget.
The Department of Finance said the province posted a deficit of $13.5 billion for the fiscal year just ended, more than $19 billion lower than the 2021 outlook. As the pandemic has introduced considerable uncertainty to the province’s fiscal outlook, the Ford government consistently overestimated annual deficits throughout its tenure at Queen’s Park.
The government forecasts the deficit to reach $19.9 billion in 2022/2023 before falling to $12.3 billion in 2023/2024 and to $7.6 billion by 2025. This forecast is based on a “Medium Growth Scenario”, with actual results depending on Ontario’s economic situation in the years to come.
PCs say they expect to spend about 9% more this year than at the height of the COVID-19 pandemic, and also run a higher deficit. Spending in key sectors would increase, on average, by about 5% per year over the next three years.
Ontario’s financial watchdog said earlier this month that the province would potentially have balanced its books by 2023/24, with surpluses by 2025, but the PC government opted instead for spending increases in certain key areas.
While PCs were elected on a promise to reign in government spending, Bethlenfalvy said the pandemic “exposed some of the lack of investment” from previous governments.
“I believe we have struck the right balance, to invest in Ontario, to build things, to get good jobs, to support workers and to rebuild this economy under a fiscally responsible plan,” he said. .
$158.8 billion capital expenditure plan
The centerpiece of that promised spending is $158.8 billion for core infrastructure projects to be spent over the next decade, with the goal of spending $20 billion of that total this year and next. .
The breakdown includes:
- $25.1 billion for highways, including the controversial Highway 413, the Bradford Bypass, a new twin bridge over the Welland Canal, and the first widening of Highway 401 starting in Pickering and moving east through the Eastern Ontario. The budget did not include any specific costs for individual projects.
- $61.1 billion for public transit projectsincluding building major subways in Toronto and expanding service on the GO Transit network.
- $40 billion for hospitals and healthcare facilities, including $27 billion in capital grants. Ford and his ministers have made a slew of hospital-related funding announcements in recent weeks, including several projects in Toronto, Ottawa, Windsor, Brampton and Muskoka.
- 21 billion dollars for the schools, with $14 billion for capital grants. Education Minister Stephen Lecce said this month that $500 million would be invested in 37 school projects in 2022/2023. Ontario’s school repair backlog was estimated in September at about $16.8 billion.
The government has touted its proposed spending as “one of the most ambitious capital plans in the province’s history.”
By comparison, in their 2018 pre-election budget, the Ontario Liberals promised a $182 billion capital plan over 10 years, including $79 billion for public transit and $16 billion for the schools.
Targeted tax cuts for seniors and low-income workers
With affordability and the rising cost of living expected to be defining issues on the campaign trail, the PC budget includes several measures targeted specifically at voters’ wallets.
While most of the proposed relief has already been announced, including waiving license renewal fees and reducing the provincial gas tax by 5.3 cents per liter for six months beginning July 1, There are two notable tax breaks on offer.
The first is a promised improvement to the Low-Income Individuals and Families Tax Credit (LIFT) so that more workers become eligible to receive at least a partial refund of their income tax.
The current tax credit is only available to individuals earning up to $38,500 or families whose annual income does not exceed $68,500, up to a maximum of $850 per income.
The enhanced credit would extend eligibility to individuals earning up to $50,000 or families with a combined income of $82,500 and provide a refund of up to $875. The rate at which the rebate is removed after a certain income threshold would also be reduced, from 10% to 5%.
The proposed changes would mean 700,000 more workers could benefit from the non-refundable tax credit, the government said, bringing the total to about 1.7 million Ontarians.
Finance Ministry officials said the current program costs about $400 million a year, with the enhancement adding another $320 million to that amount.
A second commitment in the budget is the Ontario Elderly Home Care Tax Credit, which the government says would help cover medical expenses for some residents aged 70 and over for things like walkers, hearing aids, home oxygen and attendant care.
The refundable credit would cover up to 25% of eligible seniors’ medical expenses, up to a maximum of $1,500 per year. Seniors with incomes of $35,000 or less could claim the full credit, with the amount gradually reduced for those with incomes above that threshold.
PCs said it would provide an estimated $110 million in support to about 200,000 low- and middle-income seniors, averaging about $550 per family each year.
One measure notoriously absent from this pre-election budget: a 2018 promise from Ford for a 20% middle-class income tax cut. At the time, PCs said it would be in place by the third year of their term.
Running out of climate change commitments
Meanwhile, the pre-election budget also contains the government’s investments to overhaul Ontario’s manufacturing capacity, including its critical minerals strategy released in March and efforts to increase production of electric vehicles in the province.
In his speech, Bethlenfalvy said the province’s electric vehicle production plan is partly aimed at meeting climate goals “without imposing a carbon tax.”
The budget document itself only mentions the term “climate change” once.
Earlier this month, the province quietly revised its strategy to meet Ontario’s 2030 carbon reduction targets. The new path does not include any reductions due to greater adoption of electric vehicles, which accounted for nearly 15% of the emissions reductions projected in the government’s 2018 Made-in-Ontario Environment Plan.
The government, however, promises the creation of a new provincial park, although the budget document does not provide details on its location or cost.
Thursday’s budget was originally due to be tabled by March 31, but the government controversially amended its own law to delay its release. Officials said it was because they needed time to fully understand the budget implications of pandemic-related spending.