TORONTO – Ontario’s newly elected Liberals steamrolled ahead Monday with the same big-spending budget that triggered the June 12 election, despite opposition warnings that the $130.4-billion plan will trigger a downgrade of the province’s debt rating and lead to massive public-sector job cuts.
The Liberals didn’t even bother putting a new cover on the deja-vu document they had tabled back in May, its passage a foregone conclusion now that the party controls the legislature with a majority of seats.
“Ontarians gave our government a strong mandate to implement the budget and the plan that we took to the people,” said Finance Minister Charles Sousa.
The Liberals promise to spend $130 billion on infrastructure over a decade — including $29 billion for public transit and transportation projects — $2.5 billion in corporate grants to lure and keep businesses in the province and $1 billion to build a transportation route to the Ring of Fire mineral deposit in northern Ontario.
They also pledge to build new college and university campuses, create spaces for 15,000 more post-secondary students and increase the number of apprentices training in Ontario.
The province plans to hike taxes for individuals earning more than $150,000 as well as levies on aviation fuel and tobacco, and create an Ontario pension plan that will require contributions from both employees and companies.
Spending is forecast to jump by $3.4 billion this year, $900 million more than projected in the 2013 budget, with program spending expected to climb to $119.4 billion. That’ll push up the deficit to $12.5 billion this year, but the Liberals insist they’ll still balance the books in 2017-18.
They’ve touted the budget, which has slowly leaked out since late March, as a plan that will provide the necessary cash injection to grow Ontario’s economy while holding the line on public sector compensation and finding other savings to staunch the red ink on schedule.
“It’s easy for some to suggest, don’t spend the money, don’t invest in transit and all these other things because it’s too expensive,” said Sousa. “It’s more expensive if we don’t do it today.”
But the opposition parties warn it’s a ticking time bomb that will herald a new wave of public sector job cuts and provoke a downgrade of Ontario’s debt rating, jacking up borrowing costs that are already consuming about $11 billion a year — its fourth-largest expense.
Ontario’s net debt is expected to climb $20.1 billion to $289.3 billion this year, a stunning 40 per cent of gross domestic product.
Moody’s changed its outlook on Ontario’s debt rating to negative from stable in early July, saying it could be downgraded if the province “fails to provide clear signals of its ability and willingness to implement the required measures to redress the current fiscal pressures.”
Ontario can’t afford such a “disingenuous” budget that hikes both taxes and spending, said interim Progressive Conservative Leader Jim Wilson.
“It is immoral to give people false hope with a budget … only to have to take away services and programs when the lenders put a gun to your head and say, ‘Your line of credit has dried up,’” he said.
Both the Tories and New Democrats say the government will have to make big cuts to the public sector to balance the books.
“You simply have to scratch the surface and you see some real problems,” said NDP Leader Andrea Horwath, who suffered a backlash from some party supporters when she rejected the budget in May.
“One of the big problems that we see is a lack of any new plan for good jobs, we see a fire sale of public assets, we see huge implications around cuts to jobs. None of these things are progressive.”
Premier Kathleen Wynne vowed not to shrink the public sector during the election campaign, after the Tories made a disastrous promise to cut 100,000 jobs to help eliminate the deficit in two years.
“We’ll make transformational changes where necessary, but it’s not our intent to purposely go after the public sector,” Sousa said Monday.
But union leaders say there’s no way jobs won’t be lost.
“With what they’re promising to spend and how they’re promising to control costs, the public service can only shrink,” said Warren “Smokey” Thomas, president of the Ontario Public Service Employees Union.
“It will absolutely be impossible” to balance the books without layoffs, said Fred Hahn, president of CUPE Ontario.
“This budget contains cuts in some ministries of up to six per cent every year and that is a loss of services and a loss of jobs,” he said. “It’s the wrong direction.”
Voters didn’t endorse the budget, they simply punished the Tories for the mistakes they made during the campaign, said Wilson.
“I don’t remember going to any door or anywhere where anybody talked about the Liberals’ budget,” he said. “They certainly did talk about the 100,000 jobs cut.”
The Liberals did make minor changes to the budget bill, folding in other pieces of legislation that died when the snap election was called.
They include removing domestic content requirements for solar and wind energy projects, hiking the aviation fuel tax from 2.7 cents a litre to 6.7 cents over four years starting in September and freezing MPP salaries until the deficit is eliminated.