Ontario expected to face lower deficit of $14.4 billion: finance minister

TORONTO – Ontario’s minority Liberals will reach out to labour leaders and the Progressive Conservatives to get a public sector wage freeze that’s needed to eliminate the province’s $14.4 billion deficit, Finance Minister Dwight Duncan said Monday.

That deficit figure is lower than the $14.8 billion projected in last spring’s budget, due to higher-than-expected revenues stemming from a higher tax base, Duncan said after delivering his fall economic update.

The document predicts the province will collect $4 billion more in tax revenue than last year, including nearly $2 billion more in personal income taxes and about $1 billion more in corporate taxes.

But it won’t accelerate his plan to eliminate the red ink in 2017-18, as deficit projections for the next few years remain unchanged.

NDP Leader Andrea Horwath took credit for the extra cash that’s helped to lower the deficit figure, saying it’s the result of changes her party demanded from the Liberals in exchange for their help to pass the budget.

“You can see that the ideas that we were putting forward back in October are the very ones that are helping this government tackle the deficit,” she said.

But Duncan said it’s not the result of those concessions, which included cancelling a planned corporate tax cut and a new surtax on the wealthy.

“It’s much broader than that,” he said.

“In fact, on the personal (income tax) side, the number we’re going to realize from that new bracket is right now — and it’s too early to give you hard numbers — but we think it’s going to be a lot less than even we originally thought.”

The real challenge ahead involves controlling expenditures by freezing public sector pay, which consumes about half of the annual budget, Duncan said. And he’s prepared to talk to “anyone” to achieve that goal.

After passing a bill that reined in teachers’ salaries, the Liberals unveiled draft legislation last month that would freeze wages of 481,000 workers in hospitals, colleges, universities, nursing homes and the civil service.

While the Tories helped pass the teachers’ bill, they’ve sharply criticized the legislation for the broader public sector, calling it a “weak” bill that doesn’t cover municipal workers, such as police, firefighters and public transit workers.

Duncan has rejected the Tory demand to open existing contracts, saying it will never get through the courts, and said he won’t extend the legislation to cover municipalities.

But the Liberals will continue to talk to the Conservatives in the hopes of reaching an agreement to support the legislation, which the NDP has rejected outright, Duncan said. He’ll also be pursuing “any options outside the legislature,” including labour unions.

“We’d be prepared to talk to anyone about getting zero and zero,” he said. “We’ll keep an open door.”

The Liberals would prefer not to legislate a wage freeze and have managed to broker agreements with some of the unions representing teachers and civil servants, Duncan said.

“We’re very much open to working with unions in the public and broader public sector to do what we were able to do with OECTA, AMAPCEO and the French-language teachers,” he said.

The Progressive Conservatives say they want a wage freeze, but Duncan is getting ahead of himself. No meetings have been scheduled so far to meet with the minister.

Opposition Leader Tim Hudak called the economic update an “unremarkable, unimaginative and unhelpful embrace of the status quo.”

“Today’s economic statement should clearly have been an opportunity to debate action-oriented measures that reduce the overspending that is holding back Ontario’s engine of growth,” he told the legislature.

“But instead all we got was another set of red ink, another set of excuses and another can kicked down the road.”

The Progressive Conservatives said they would be able to slay the deficit sooner by freezing wages, reducing government spending and creating jobs to increase revenues.

Horwath said her party wants to eliminate the deficit and freeze wages, but only through negotiated settlement, rather than forcing it through legislation.

It will be difficult for Duncan to make any headway with the unions when public sector workers are “madder than hell” at the Liberals, she said.

Duncan’s statement also forecast higher economic growth, with gross domestic product pegged at 2.0 per cent this year, up from 1.7 per cent forecast in the budget.

But the government lowered its outlook for economic growth in 2013 and 2014, at 1.9 per cent and 2.3 per cent respectively.