15 essential aspects of 2014 Ontario budget
TheGlobeandMail.com – News/Politics
May. 01 2014. Staff
The Ontario Liberals tabled the budget Thursday in Toronto with a spending plan that projects a deficit of $12.5-billion, more than the $10.1-billion previously projected for this year. Finance Minister Charles Sousa said the deeper deficit is necessary so the government can spend money to stimulate the sluggish economy. Read the main story: Ontario Liberals give NDP hard deadline to decide on budget
Here’s a look at 15 major aspects of the proposed budget:
Retirement pension plan
A new Ontario Retirement Pension Plan (ORPP) would provide a top-up to the Canada Pension Plan for about three million workers in the province. While CPP covers all employees, the ORPP would cover about half of the workforce, excluding people whose companies already have a workplace pension plan and those who work in federally regulated industry sectors. The ORPP would require employees to contribute 1.9 per cent of their incomes, which must be matched by employers, up to a maximum annual income of $90,000.
Transit
The Ontario government has found less than half the money needed to start funding a decade of transit investment for the Toronto area and plans to rely on borrowing, asset sales and hitting up the federal government for the rest. The budget promises $15-billion in transit investment for the Greater Toronto and Hamilton area, and $14-billion outside the GTHA, over the next 10 years can be made at minimal cost to residents, completing the government’s reversal from its long campaign to find public support for new sources of revenue. The budget also proposes a 4-cent raise in the tax on aviation fuel, phased in over four years.
Ring of Fire
The government promises to commit $1-billion to build a road to the remote Ring of Fire region in Northern Ontario, which contains large mineral deposits. The commitment is contingent on securing matching funds from the federal government to raise $2-billion in total. The lack of a transportation link to the undeveloped area has been a major stumbling block in negotiations with companies to build facilities and mines in the region.
Deficit
Ontario is projecting a deficit of $12.5-billion, missing the government’s previous target by $2.4-billion. The Liberals say they will still balance the books by 2017-18, mostly by pushing off deficit reduction to next year. The government is now projecting a shortfall of $8.9-billion in 2015-16 and $5.3-billion the year after that. The Liberals argue they had to run a large deficit this year to stimulate the province’s sluggish economy. They plan to reach a balanced budget through extra tax revenue and economic growth.
Electricity savings
The province plans to cut electricity prices for low-income Ontarians with a new subsidy that would take $15 a month off the average bill. The government also wants to take the debt retirement charge, which costs the average household $5.60 a month, off residential bills, which would help ease the pain for consumers when the clean energy benefit ends in 2016. Ontario also plans to expand an energy saving program for industrial businesses that move to off-peak hours, and hand out cheaper power to companies looking to expand operations and create jobs.
Social spending
The budget is peppered with new spending for aboriginals, low-income and sick Ontarians, much of it previously announced. Commitments include an increase to the Ontario Child Benefit to $1,310 per child per year and a plan to tie future hikes to inflation; a 1-per-cent increase in welfare and social-assistance rates, including a top-up for single adults without children; $80-million a year for five years toward a federal-provincial affordable housing program; and a 30-per-cent increase to the allowance provided to aboriginals living in remote communities. Ontario also plans to raise the minimum wage to $11 an hour on June 1 and tie it to inflation starting in October, 2015.
Justice
Toronto is slated to get a new downtown courthouse, one that could consolidate the bulk of criminal cases in the city. Existing courthouses would not be shuttered. Instead, Ontario Court of Justice operations would be moved out of existing leased spaces, including Old City Hall, and into a new courthouse developed through a private-public partnership. The Liberals also promise to more than double the number of Ontarians who qualify for legal aid by raising the program’s income threshold for the first time since the 1990s.
Health care
The hospital sector would gain access to a new capital repair fund worth $700-million over the next decade, on top of the $11.4-billion the province plans to spend in the next 10 years on more than 40 hospital redevelopment and expansion programs, all of them previously announced. The budget also touts a slew of commitments already unveiled by Health Minister Deb Matthews, including a $4-per-hour raise by 2017 for personal support workers in the home-care sector, funding for a single cycle of in-vitro fertilization, and the establishment of a patient ombudsman’s office.
Education
Ontario plans to stand pat on education spending that has already been promised. An extra $50-million annually for deferred maintenance at university and college campuses is the sole new revelation. Yet the province reiterated commitments to finish rolling out full-day kindergarten by this fall, sustain hundreds of millions of dollars in tuition fee rebates to university and college students, and continue funneling more than $2.3-billion annually into education infrastructure.
Jobs
The province plans to create a $2.5-billion Jobs and Prosperity Fund to dole out grants to businesses over the next decade in hopes of encouraging more companies to set up shop in Ontario. The money is meant to help Ontario compete with other jurisdictions, particularly in the United States, that use public funds to attract investment. Creating a separate fund is designed to send a signal to businesses that the money will be available for the long term.
Income tax hikes
Ontario plans to hike income taxes on high-income earners. People making more than $220,000 would have to pay the top income-tax rate of 13.16 per cent – an average of $5,500 more in taxes – which previously applied only to those earning more than half a million. Those taking in between $150,000 and $226,000 would be put in a new tax bracket, paying an average of $425 more. The changes would affect about 222,000 people, or 2 per cent of taxpayers.
Tobacco Tax
As previously announced, Ontario is increasing the tobacco tax rate from 12.35 cents to 13.975 cents per cigarette (or from $24.70 to $27.95 per carton) and per gram of tobacco products other than cigarettes and cigars effective 12:01 a.m. Friday.
Condos
Ontario proposes to update the Condominium Act by establishing mandatory qualifications for condo managers and giving condo owners an alternative to the court system when trying to resolve disputes. The legislation would also include measures to increase protection for owners, tenants and buyers by improving condo management standards.
Long-term disability benefits
In a move long sought by former employees of Nortel Networks Corp., the province plans to amend the Insurance Act to require companies to use an insurance company to provide long-term disability benefits to workers. Some companies, including now-defunct Nortel, have opted to fund their long-term disability benefits themselves, but it means that injured or ill workers are left with nothing if the companies go bankrupt. While the Ontario law change would come too late to help Nortel’s disabled workers, they have lobbied for legal reforms so other workers won’t end up in the same situation.
Class-action lawsuits
Ontario plans to change rules governing the ability of shareholders to file class-action lawsuits against companies. Current rules allow investors to sue companies for inaccurate financial disclosures, but several prominent cases have stalled because they have exceeded the allowable three-year time limit to have the lawsuits certified in court. Investors say the time limit is too short to get a case through the clogged court system. Ontario said Thursday it would suspend the time limit period to seek leave to proceed with cases, which would allow claims to go ahead.
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Tags: budget, economy, ideology, pensions, tax
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