Three things you need to know about Ontario’s 2019 budget

ANALYSIS: The Progressive Conservatives’ first budget is here. TVO.org lays out what Doug Ford’s government has in store for Ontarians on transportation, the deficit, and more
By John Michael McGrath - Published on April 11, 2019
Ontario Budget document
The provincial government on Thursday presented its 2019 budget, titled “Protecting What Matters Most.” (Matthew O’Mara)

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The Progressive Conservatives on Thursday presented their first budget since winning a large majority in last year’s provincial election. That election was fought over an array of issues, but front and centre for many voters were Ontario’s finances and how the Liberals managed them.

So what’s the difference between the former Liberal and new Tory plans? The government says Ontario’s budget will be balanced one whole year earlier under Premier Doug Ford and Finance Minister Vic Fedeli than it would have been under their Liberal predecessors, Kathleen Wynne and Charles Sousa: the Tories intend to bring the budget back into balance in the 2023-24 fiscal year instead of in 2024-25. The plan is for the province still to be in deficit by the time Doug Ford goes back to voters and asks for their confidence again in 2022.

But that’s merely the most basic fact contained in the budget’s 300-plus pages, which lay out the government’s plan to spend $150 billion. The Tories are calling their plan “Protecting What Matters Most.” So here are some of their biggest priorities — what seems to matter most to them — in the 2019 budget.

The deficit and the debt

The deficit for this year is projected to be $10.3 billion; the government wants to reduce that to $2.2 billion by 2022. It’s no surprise that the Tories are focused on the deficit, but this year’s budget also makes the debt a point of concern. That wasn’t the case in previous budgets.

“Over the past decade, the previous government allowed the debt to more than double to $347 billion, or about $24,000 for every man, woman, and child in the province,” Fedeli told the legislature on Thursday. The government says it’s concerned about the rising interest rates on its debt — the rate was 2.87 per cent last year; it’s projected to increase to more than 4 per cent by 2021. The Tories want to bring Ontario’s debt-to-GDP level (a broad measure of the province’s overall fiscal sustainability) below the current 40.2 per cent.

The way to decrease that level is more or less the same as the way to decrease the deficit: restrain spending and allow economic and government-revenue growth to handle the rest. If the Tory plan holds, there won’t be an overall cut to government spending, although spending will grow more slowly than it did during the Liberal years: the budget calls for just $7.5 billion in new program spending (that is, everything except debt service) from 2019 to 2023. That’s less spending growth than the province saw in just one year under the Liberals (between 2017 and 2018, new program spending hit $7.6 billion).

Fiscal restraint isn’t keeping the Tories from trying to tackle some of their other priorities: the income-tax credit for low-income families was announced last year, and this budget includes changes that would lower taxes for businesses (matching federal changes) and add new programs for child care and seniors’ dental care. The government is planning for a substantial increase in revenue from gambling and alcohol sales.

Transit and transportation

The government announced its major subway plan on Wednesday, before the budget was presented. The premier may be especially focused on trains in tunnels, but his government has plans to do more than just build subways in Toronto. The Tories are picking up roughly where the Liberals left off when it comes to expanding GO train service throughout the GTA — the previous government was committed to a plan called “GO RER,” and, while the Tories have ditched that branding, they’ve retained the commitment to running trains every 15 minutes, in both directions, throughout the core of the GO rail network. The budget also confirms that the government will, as expected, “press pause” on a high-speed rail line from Toronto to London to Windsor, something the Liberals had committed to building.

The language contained in the budget makes it clear that the government has listened to criticism of the proposed line, much of which has come from rural and smaller communities in southwestern Ontario worried about high-speed rail cutting through their towns while not serving local needs. The government says it will present a transportation plan for southwestern Ontario in the fall.

One other transportation item of note: the government will not increase the share of gas taxes that goes to municipalities. In 2017, Wynne promised to devote a larger share of gas taxes to municipalities as an alternative to allowing Toronto city council levy tolls on the Gardiner Expressway and the Don Valley Parkway. Now, Toronto will get neither toll revenues nor additional gas-tax money.

Sparring with Ottawa

Unsurprisingly, the province’s frosty relationship with the federal government gets plenty of ink in this year’s budget. The fight over the federal carbon tax — which took effect April 1 — is front and centre. The government calls it a “job killing” tax, and the premier has repeatedly warned that the carbon price could cause a recession. The government’s own economic forecasts for the next several years don’t project any kind of recession.

The set-to between Ontario and Canada isn’t going to end anytime soon: the province’s court challenge against the carbon tax begins on Monday at the Court of Appeal in Toronto.

It’s not just the carbon tax that’s causing friction between governments, however. The increase to Canada Pension Plan premiums — part of a deal negotiated under the Liberals, who, in the 2014 election, ran on improving retirement security — is also singled out as having had a negative impact on business and jobs.

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