Opportunity in Ontario budget

TheStar.com – Opinion – Opportunity in Ontario budget
February 28, 2009

Grabbing headlines this week was a forecast from TD Bank chief economist Don Drummond of a $13 billion provincial deficit, thanks to the “free fall” of the American economy.

It was noted that a deficit that size would be even larger than the record $12.4 billion registered by Bob Rae’s much-maligned NDP government in the 1992-3 fiscal year. (Albeit, the Rae deficit was still proportionately larger, as the provincial budget was half as big in those days.)

The deficit forecast contributed to the crisis-like atmosphere at Queen’s Park as the provincial government prepares to bring down its budget on March 26 with its revenues falling amid demands for more spending.

“These are some of the toughest times we’ve ever seen in Ontario,” concedes a sombre Premier Dalton McGuinty. “The global economic crisis that has our province in its grip is deeply affecting us.”

But the crisis also presents the government with an opportunity to make this a transformational budget – one that will provide lasting benefits beyond the current economic tsunami.

In the United States, President Barack Obama is taking a transformational approach with a proposed budget that has a deficit of $1.75 trillion but includes measures to reform health care and combat global warming.

In Ottawa, on the other hand, the ruling Conservatives produced a budget with a big deficit ($34 billion) but no measures that could be described as transformational. Instead, there were a lot of half-measures. It was, as many commentators remarked at the time, an opportunity lost.

At Queen’s Park, we are told, there is a debate underway within McGuinty’s government whether to make this a budget of “big ideas” or an incrementalist document. We favour the former.

For example, the provincial budget could: make a major down payment on programs to reduce child poverty (which the government is committed to cutting by 25 per cent in five years); re-energize the restructuring of health care, including primary care reform and computerization (which seem to have lost steam); invest heavily in development of a green car (to make Ontario the centre for this technology); provide incentives for business to spend more on research (where we badly trail the U.S.); make it easier for Ontarians to get a post-secondary education (only 40 per cent do now); and harmonize the GST and the provincial sales tax (which would be a major boost for businesses, especially in the hard-pressed manufacturing sector).

Government funding for these ideas might have to come with conditions to ensure, for example, that the money is not simply soaked up by salary increases.

Like Obama’s health-care and climate-change initiatives, some of these measures would be politically controversial and would encounter resistance from entrenched interests. But an economic crisis may provide enough cover for the McGuinty government to move ahead.

And all of these ideas would help Ontario weather the current economic storm. More importantly, they would also pay dividends long after the storm has passed.

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