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Deficit for the Wynne? An Ontario Budget Overview
This afternoon, Finance Minister Charles Sousa unveiled Ontario’s 2018 Budget, A Plan for Care and Opportunity.
“We slayed the deficit, but make no mistake, balancing the budget is not an end in itself. It is a means to an end.”
-Finance Minister Charles Sousa
As was hinted at in recent provincial funding announcements, investments detailed within the Budget are heavily weighted towards social initiatives such as child care, dental care, and prescription drug coverage. Though Minister Sousa projects a balanced budget for the 2017-2018 fiscal year, not to mention a surplus of over $600 million, the Budget contains record levels of investment in the province’s health care system.
With an election looming on June 7 th, A Plan for Care and Opportunity provides the Wynne government the opportunity to give their approval rating a much-needed bump and showcase a stark contrast to PC Party Leader Doug Ford’s austerity rhetoric. With Ford scheduled to officially launch his candidacy in the riding of Etobicoke North tonight, expect much of the conversation to be grounded in opposition to the main tenants of the 2018 Budget.
Overall, the Budget details previously-announced care-centric programs such as the expansion of OHIP+ to individuals aged 65 and over, the introduction of free child care for children aged two-and- a-half until they are eligible to enter kindergarten, and the new Ontario Drug and Dental Program, which will reimburse up to 80% of drug and dental expenses for Ontarians otherwise uncovered.
Positioning the historic levels of healthcare spending as strategic investments in the futures of Ontarians, the Budget also includes a growth in infrastructure spending to ensure the construction of new hospitals, schools, roads, and transit systems that now totals $230 billion over 14 years.
- Balanced Budget: The government is projecting a $600 million surplus in the budget for 2017-2018, but will run a deficit of $6.7 billion in 2018–19 and $6.6 billion in 2019–20, before returning to balance by 2024-25.
- Debt: Projected to be $308.2 billion as of March 31, 2018, down from the net debt projection of $311.9 billion in the 2017 Budget. Ontario’s net debt‐to‐GDP ratio peaked in 2014–15 at 39.3 per cent and is now forecast at 37.1 per cent in 2017–18, below the forecast of 37.5 per cent for 2017–18 contained in the 2017 Budget. The net debt‐to‐GDP ratio is forecast to remain below the 2014–15 peak and resume a downward trend in 2022–23.
- Deficit: Accumulated deficit is projected to be $192.4 billion as of March 31, 2018, compared to a projection of $193.5 billion in the 2017 Budget.
- Unemployment rate: 5.5 per cent, is the lowest it has been in almost 20 years and less than the national average for 34 consecutive months.
- GDP Growth: Real GDP growth is expected to average 1.9 per cent per year between 2018 and 2021, in line with the national average.
- Total investments: New investments total $5.7 billion in 2018–19, $6.3 billion in 2019–20, and $8.3 billion in 2020–21, or $20.3 billion over three years.
- Total Expense: Record high of $158.5 Billion.
2018-2019 Ministry Expense (MOHLTC): $61.3 billion in 2018-2019
The biggest splash in the Budget comes in the provincial healthcare sector – and this comes as no surprise. Over the past two weeks, the Liberals have made a number of health-focused pre-budget announcements, all of which have resulted in a historic investment in the provincial healthcare system. At 38.7% of all provincial spending, health comes in as the largest expenditure in the 2018 Budget. Looking to the future, the Ministry’s budget will grow by $3 billion in the next year, and is projected to grow by 4.3% overall to $66.6 billion by 2021.
Some key takeaways:
- Hospitals are the big winner. The Budget allows for $822 million in additional funding for hospital operations – a 4.6% increase over last year. This reflects a difficult past year for the Ministry, which saw controversies over wait times and procedural delays in the hospital system. The government has also pledged $19 billion over ten years to fund over 40 major hospital projects in the construction or planning stages.
- Those without insurance need not worry: introducing the Ontario Drug and Dental Program. The government estimates that one in four Ontarians don’t have access to extended health benefits, including dental care. To reflect this, Ontario will invest over $800 million over two years to create the Ontario Drug and Dental Program, which would reimburse eligible participants for up to 80% of prescription drug and dental expenses. This would cover up to $400 per person, plus $50 for each child, in a family.
- Senior care is a big priority. As announced last week, the Liberals extended the benefits under the popular OHIP+ program – which saw free prescription drugs for those ages 24 and under – to senior citizens over 65. Slated to start in 2019, this includes free prescription drugs for seniors regardless of income, and the elimination of deductibles and co-pays – for an estimated cost of $575 million annually by 2021. The government also pledged $1 billion over three years on the new Seniors’ Healthy Home Program, which would help seniors cover costs associated with maintaining their homes.
- Historic investments in mental health. The provincial government has pledged an additional $2.1 billion over four years towards the provincial mental health and addictions system – totaling an overall spend of more than $4 billion in 2018. This includes:
- Publicly-funded structured psychotherapy for those with anxiety and depression, estimated at over 160,000 people across the province
- Providing students access to school-based supports for mental health & addictions services
- Improving access to mental health services at the community level
- Significant investment in long-term care. The government has committed $300 million over three years on long-term care, with a goal of hiring a registered nurse for every facility, and increasing the provincial average for daily hours of care for residents to four hours per day.
Continuing the provincial government’s pursuance of a safe and sensible approach to the legalization of recreational cannabis, the 2018 Budget emphasizes the support of public safety, road safety, education, and law enforcement initiatives in lieu of cannabis-related profits. With figures prefaced as being based upon reasonable assumptions about the pace of growth of recreational cannabis sales, the Ontario Cannabis Retail Corporation is projecting an $8 million loss in 2017-2018 due to upfront costs of setting up retail operations the province over. Only in 2019-2020 is Ontario expected to begin receiving any cannabis-related revenue, with the current projection for that year estimated at $35 million.
In terms of specific initiatives stemming from the legalization of recreational cannabis, the 2018 Budget outlined the following undertakings:
- Increased law enforcement capacity, specifically supporting the Ontario Provincial Police, as it relates to funding standard field sobriety test training;
- The creation of a specialized legal team to support drug-impaired driving prosecutions;
- Increased capacity at the province’s Centre of Forensic Sciences to support toxicological screenings and expert testimonies, and;
- The creation of the Cannabis Intelligence Coordination Centre that will seek to shut down illegal storefronts and help combat black market operations.
- The 2018 Budget also highlighted exactly how the province plans to support municipalities upon the enactment of legalization, with $40 million over the first two years of legalization to flow to cities across the province from the newly-created Ontario Cannabis Legalization Implementation Fund. This Fund will be populated by monies from the federal excise duty.
Infrastructure and Transit
Ministry expense (Infrastructure): $816.6 million in 2018-2019
Ministry expense (Transportation): $5.6 billion in 2018-2019
This year’s budget is similar to Budget 2017 in sheer magnitude of planned investments, and areas of priority for the province. Hospitals received significant attention, unsurprising given contentious debates during Question Period that often centered on overcrowding and the general state of disrepair of Ontario’s hospitals. The total 10-year infrastructure investments earmarked by the province total $182 billion. However, the budget primarily restates recent announcements, including:
Health and Social Infrastructure
- $19 billion over the next ten years to build and renew hospitals
- o $2.4 billion for the redevelopment of SickKids hospital in Toronto
- o $1.8 billion for Ottawa’s new civic campus
- More than $3 billion in capital grants to postsecondary institutions over the next 10 years.
- Almost $16 billion in capital grants over 10 years in new and improved schools, which will help deliver high‐quality programs and increase student achievement and well‐being.
- Ontario will also continue school renewal by investing $1.4 billion in the 2018–19 school year. This is in addition to the $2.7 billion that was provided between the 2015–16 and 2016–17 school years.
- The province will provide a new investment of over $500 million starting in 2020–21 to help renew and modernize Ontario’s university and college campuses.
- Shift from traditional courtroom settings to Community Justice Centres (CJCs). CJCs will serve as hubs that will integrate various justice, health, and social services including courts, ServiceOntario centres, drop-in mental health services, and social housing. The budget has identified Kenora, Toronto, and London where the first CJCs will be established.
- $106 billion over the next 10 years for new and upgraded transit and transportation infrastructure
- Over the next 10 years, the province will invest $79 billion in public transit, and $25 billion in highways, bridges and roads. Commitments include:
- $7.3 billion in cost-matching funds allocated for transit. The funds will supplement federal funding according to bilateral agreements. More than $4 billion is earmarked for Toronto. The province will work with municipalities to prioritize transit projects, which include the Toronto Relief Line, Yonge North Subway Extension, and Waterfront Transit Network.
- New Highway 7, expansion of the 401, and initial design work for the Thunder Bay Expressway, a four-lane divided highway with interchanges
- Over the next 10 years, the province will invest $79 billion in public transit, and $25 billion in highways, bridges and roads. Commitments include:
The Budget makes no further or new financial commitments to the Ring of Fire, the Greater Golden Horseshoe Transportation Plan 2051, nor the Northern Ontario Transportation Strategy.
Economic Development & Innovation
Ministry Expense (Economic Development and Growth/Research, Innovation and Science): $1.07 billion in 2018-2019
The 2018 budget introduces the Good Jobs and Growth Plan with $935 million in new investments over the next three years including development of local talent, accelerating trade, and investing in infrastructure.
Concentrating on investment in talent and skills for the workforce, the budget includes the following:
- Investment of $170 million over three years for the New Ontario Apprenticeship Strategy and a new Office of Apprenticeship Opportunity
- Investment of $63 million over three years for the new Ontario Training Bank to provide a one-stop shop for job seekers, employers, and workers to access training that meets corresponding demand
As of late, Premier Wynne has remained focused on developing and maintaining relationships with US states, meeting with 37 governors over the past year. The Budget states, “the government will continue to work with its partners and vigorously defend the interests of Ontario’s industries and workers throughout the NAFTA negotiations.”
The province commits it will maintain support for the food and beverage sectors through the Food and Beverage Growth Fund, providing $120 million of investment over the next three years. The Ministry of Finance and the Ministry of Agriculture, Food and Rural Affairs has also committed to developing a new multi-year strategy for industry growth that is consistent with Ontario’s internal and international trade obligations for the wine, cider, spirits and beer producers.
Investments in innovation and transformative technologies includes $45 million over three years to support the growth of the artificial intelligence sector. Ontario is moving forward on its commitment to invest up to $10 million to create a Centre of Excellence in Health Care Artificial Intelligence, starting with $1.3 million in 2018–19. The government is partnering with St. Joseph’s Health System Hamilton, Niagara Health System, McMaster Faculty of Health Sciences and the Vector Institute on this initiative.
Natural Resources & Energy
Ministry expense (Energy): $1.99 billion in 2018-2019
Ministry expense (Natural Resources and Forestry): $849.7 million in 2018-2019
Ministry expense (Northern Development and Mines): $813.7 million in 2018-2019
The Ring of Fire is in the Budget but only as a reannouncement. The 2018 Budget outlined the commitment of $1 billion to the region to develop a year-round access road to the proposed development site with no additional details on timing.
On forestry, the Budget highlights the existing Forestry Growth Fund which supports employment in the north. With the current state of U.S. trade policy and disputes on softwood lumber, the government will continue to invest $30 million over the next three years to provide stability to the forestry sector and its workers.
Nuclear and the refurbishment project was not mentioned in Budget 2018 which may come of a surprise as it was the main theme throughout the Long-Term Energy Plan and that was released in fall 2017. The refurbishment of OPG’s Darlington Nuclear Generating Station is Canada’s largest clean energy project at $12.8 billion over 10 years supporting, 14,000 jobs across the province.
Budget 2018 is investing in the Great Lakes. The government is investing an additional $52 million over 3 years for new technologies to address algae, toxic chemicals, plastics, and enhancing monitoring capabilities with a focus on Lake Erie
Environment & Climate Change
Ministry expense (Environment and Climate Change): $1.32 billion in 2018-2019
Cap and trade remains a key pillar and revenue source for Liberal government. In 2017, the Ministry of Environment and Climate Change hosted five cap and trade auctions generating $2.4 billion in revenue to be deposited in to green initiatives outlined in the Climate Change Action Plan. In early 2018, Ontario linked the cap and trade program with Quebec and California and held the first joint auction generating close to $471 million. The program continues with the second joint auction held on May 15 th for registered participants.
On electric vehicles and transitioning to a low-carbon economy, the Budget highlights a number of ongoing initiatives including incentives for purchasing electric vehicles and increasing electric vehicle charging infrastructure. Totaling over $160 million, these initiatives are funded through Ontario’s cap and trade program and the Climate Change Action Plan.
Another Climate Change Action Plan initiative, the $150 million Municipal Greenhouse Gas (GHG) Fund will announce successful projects in 2018. Projects selected will support municipalities in their effort to reduce emissions, improve building and energy efficiency.
Ministry Expense (Tourism, Culture and Sport): $1.5 billion in 2018-2019
Arts and culture was included in the budget mainly through investments in Culture and Recreation Infrastructure projects. Of these projects, 8 projects were highlighted, including:
- Relocating the Museum of Contemporary Art (MOCA) to the historic Northern Aluminum Company Building in a mixed-use neighbourhood where studio and exhibition space will be available for artists
- Nominating Phase Two of the Massey Hall Revitalization Project, including heritage restoration and a music education and artist development hub, for federal funding under the Building Canada Fund
- Also included in the Budget is the province’s intent to provide the City of Toronto with theauthority to design and administer a new program to provide property tax reductions up to 50% to those facilities offering affordable spaces for the arts and culture sector. The new program would be fully run by the City of Toronto.
Other items to note:
- Investment of an additional $21 million over three years to provide students with access and exposure to arts education in dance, drama, music and visual arts.
- Investment of $28 million over three years to create a provincial Digital Public Library that provides access to digital content such as e‐books, music and audiobooks; research databases; special collections; and accessible and alternative format materials across a common web platform
- Amendment to the Taxation Act, 2007, to extend eligibility for the Ontario Interactive Digital Media Tax Credit to film and television websites purchased or licensed by a broadcaster and embedded in the broadcaster’s website. Applying to websites that host content related to film, television or Internet productions.
From the Opposition Benches
In response to the 2018 Ontario Budget, opposition leaders were eager to express their discontent, and both suggested that the Budget was a clear attempt to win critical votes the upcoming election. Both Horwath and Ford both added the only positive outcome from the budget is that it will be “Kathleen Wynne’s last.”
Progressive Conservative Leader Doug Ford
“People know that if it sounds too good to be true, it probably is.”
PC Party leader Doug Ford has called the 2018 Budget a Liberal spending spree, asserting that the OLP is merely trying to buy votes through “big promises.” Ford added that “you can’t take care of the most vulnerable people in society when you have billions of dollars in debt” and announced that getting Ontario’s finances in order would be the most proactive step in order to take care of Ontario families. Ford also promised to “close the loop” on transit in Toronto, pledging that his government would ensure that the GTA has a regional transportation system that runs from “one end of the GTA, through Toronto, to the other end.”
NDP Leader Andrea Horwath
“The Liberals have had 15 years and instead of helping, they’ve only made things worse.”
NDP Leader Andrea Horwath issued a statement on the Budget – calling it “meager” and unable to “undo the damage done by the Liberals”.
In response to claims that the budget is very “left”, Horwath responded that “yes, it’s left – it left a lot of people out. It left a lot of people out of pharma care, it left a lot of people out of child care, it left a lot of people out of dental care.” Instead, Horwath suggests that the NDP plan will be able to actually mitigate healthcare costs, housing affordability, income inequality and hospital wait times – without having to raise taxes on those in middle and low-income households.
What Comes Next
Following today’s Budget Speech, the Budget will need to be debated and passed in the House. Once passed, the parties are expected to kick their respective election machines into high gear; they continue to nominate candidates, and fine tune their policy platforms.
The writ must be dropped no later than the 9 th of May for the June 7 th General Election, meaning that only four sitting weeks remain in the legislative session.
Global will be providing extensive coverage of the provincial election through our new Beyond the Ballot updates – stay tuned!