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Updated: Thu, 01 May 2014 17:07:49 GMT | By CBC News, cbc.ca

Ontario budget 2014 holds few surprises from Liberals



Ontario Finance Minister Charles Sousa speaks with reporters ahead of the unveiling of his budget on Thursday. Ryan Mahle/CBC

Ontario Finance Minister Charles Sousa speaks with reporters ahead of the unveiling of his budget on Thursday. Ryan Mahle/CBC

The Ontario government delivered the budget that was widely expected today, full of spending initiatives the Liberals are willing to test at the polls should the opposition force an election.

Amid lower-than-expected revenues, a hefty deficit and modest economic growth, the Liberals are pushing plans to invest tens of billions in transit and infrastructure over the next 10 years and to create a new provincially based pension plan. Along with those big-ticket items, the government wants to increase income taxes for Ontarians making $150,000 a year or more, while boosting both the Ontario Child Benefit and social assistance payments

The Liberals are presenting the budget as part of a long-term plan to put Ontario in a position to thrive in the future. To that end, Finance Minister Charles Sousa said there is need to drive growth, to ensure that Ontario has the modern infrastructure it needs and that the conditions are in place for business to succeed. 

"It will take vision, because it is not going to happen overnight," Sousa said in his budget speech in the legislature on Thursday afternoon.

It will also take the support of the New Democrats in order for it to pass, as the Progressive Conservatives have said they will vote against the budget and the minority Liberals don't have enough members to get it through the legislature on their own.

Earlier in the day, Sousa told reporters that if the opposition chooses to vote the budget down, "we'll take it to the people of Ontario." 

PC Leader Tim Hudak told reporters that the budget was merely "a series of promises," without a plan to create jobs and that included the proposed pension plan.

"Before you can have retirement security, you need job security," he said.

NDP Leader Andrea Horwath broke with tradition and did not speak to reporters prior to the budget's formal unveiling in the Legislature. She released a statement saying she would respond to it on Friday.

Deficit to climb

In its budget, the Ontario government says that this year's $11.3-billion provincial deficit is lower than had been projected, though it is likely to grow by another $1 billion next year. Yet Sousa insisted to reporters that the province still intends to balance its budget by 2017-18, a scenario that Hudak recently suggested the Liberals had simply "given up" on.

Total revenue for 2013-14 was estimated to be just under $115.7 billion, coming in more than $1-billion below what was projected last year -- an outcome that was attributed to lower tax revenues. The government also reported its total expenses as being $636 million less than it had anticipated, which was in part because of lower-than-expected debt expenses.

The governing Liberals had telegraphed many of the key spending plans ahead of Thursday and so had the Progressive Conservatives, courtesy of internal documents they obtained weeks ago.

Improving the province's transit and infrastructure is an emerging political issue and one that the Liberals have made a priority in the budget. The government intends to spend $130 billion over a 10-year period, an investment it believes will support 110,000 jobs annually.

Infrastructure investment plans

In terms of public transit and transit infrastructure, the government plans to spend $29 billion over the coming decade, which will be roughly split between projects in the Greater Toronto and Hamilton Area ($15 billion) and the rest of the province ($13.9 billion). 

Some of the money for these transit projects will come from a portion of redirected gas-tax revenues, as well as from the HST revenues associated with gas and diesel fuels. The government would also look to "targeted revenue measures" that would include increasing taxes on aviation fuel and restricting big businesses from claiming a small business deduction. Further funds would be raised through borrowing and by seeking federal assistance.

The province will also spend $11.4 billion on 40 hospital expansion or redevelopment projects in the decade ahead, along with hundreds of millions on deferred hospital maintenance

More than $11 billion in capital grants for schools will be provided in the next 10 years. Some of these funds will help build new schools in rapidly growing parts of the GTHA and Ottawa.

The government says it is willing to provide $1 billion towards infrastructure development in the Ring of Fire mineral deposit in northern Ontario — provided that Ottawa makes a matching investment.

Retirement concerns

The Liberals have also laid out some of the details for their plans to establish an Ontario Retirement Pension Plan. The government says that some two-thirds of Ontarians are not part of workplace pension plans, which means they are having to rely on their own savings, the Canada Pension Plan and Old Age Security support in their retirement years. But many people are unable to save the money they need to uphold their standard of living in retirement.

Given that Ottawa has not sought to expand the CPP at this point, Ontario is going to go it alone. As Sousa put it to reporters Thursday, there has been "no leadership" from the federal government on the pension issue.

The budget indicates that the proposed pension plan would collect equal contributions from workers and their employers. The government says that it is seeking to create a plan that could be wrapped into the CPP in future, should things change at the federal level.

Fate of government rests with New Democrats

If the New Democrats vote against the budget, the province will be plunged into an election. But without reaction from Horwath on Thursday, it is unclear on how likely an immediate trip to the polls is.

This is the same scenario that has played out for the past two years. But the minority Liberals have previously managed to survive by making deals with the New Democrats.

This year, Horwath and Premier Kathleen Wynne appeared more publicly distant, with the premier indicating on Wednesday that the differences between the parties were "just a reality" they had to deal with. But the premier said she hoped that the budget would pass.

The Progressive Conservatives have pressured the New Democrats to let the government fall, arguing that the third party can't continue to criticize the Liberals for spending scandals, while also continuing to support the government's survival.

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