“The hole is deep,” Ontario Treasurer Vic Fideli told a downtown business audience last Friday as he announced the findings of his financial review. “And it will require everyone to make sacrifices, without exception.”
As politics goes, it’s a fine message.
But it’s not real. The Conservatives’ election promises, unless abandoned, will dig Ontario into an even deeper financial hole. And much of the digging will be done to shovel cash to large corporations and high-income earners.
Basic math shows the Conservatives’ tax cut promises, made in full knowledge of the true extent of Ontario’s deficit, would trigger cuts multiple times deeper than the 3 or 4 per cent voters were told prior to the June 7 election.
Fideli’s Friday report pegged this year’s Ontario deficit at $15 billion, not the $6.7 billion reported in the Liberals’ spring budget. The headline is dramatic. But the news is old.
Long before this spring’s budget, Ontario’s auditor general had been publicly objecting to the Liberals’ accounting practices. The auditor general said the Liberals were improperly excluding the cost of subsidizing electricity. She said they were improperly including pension plans.
Back on May 2, the independent Financial Accountability Office restated the Liberals’ budget using the auditor general’s accounting rules, as does Fedeli’s report. And that FAO report, four months ago, projected a deficit almost identical to Fedeli’s Friday $15-billion finding.
The FAO projected revenues would be $600 million higher and expenses to be $1.6 billion lower than in Fideli’s report. But on a $165-billion budget, those are variances of less than one per cent.
Fedeli’s findings are an insubstantial nothingburger. In no material way did it turn up anything new or surprising. It just confirmed what the FAO found four months ago.
That timing matters. Thanks to the FAO report, Ontario’s political leaders all knew Ontario’s true financial situation before the election started.
But they chose to do very different things with that information. NDP Leader Andrea Horwath proposed to raise tax rates on personal incomes over $220,000 and reverse some McGuinty-era corporate tax cuts. The Ford Conservatives went the exact opposite direction.
Ford offered big-ticket giveaways. To large corporations he offered a $1.3-billion tax cut. He told polluters he’d end the $1.9-billion cap-and-trade plan. For affluent Conservative voters, he pledged a $2.3-billion income-tax cut.
In total, the Conservatives pledged $8.05 billion in revenue cuts, even through they knew the deficit situation. When you’re in a hole, you’re supposed to stop digging. Not these guys.
They had a different strategy. Throughout the campaign, the Ford Conservatives wouldn’t show Ontarians a fiscal plan. They eventually stated the costs of their promises. But they didn’t add them up. And they never showed the deficit impact. Or any plan for their cuts.
Ford repeatedly waved away Horwath’s concerns about cuts and privatization, arguing only 3 or 4 per cent “efficiencies” would be required. Basic math shows that’s wildly wrong.
Ontario’s program spending will be about $152 billion this year. A $15-billion deficit hole that’s dug $8 billion deeper by Ford’s tax cuts isn’t solved with a cut of 3 or 4per cent. Cutting $23 billion from Ontario’s $152 billion in program spending slashes about 15 per cent.
Thanks to the McGuinty-era corporate tax cuts, Ontario already has Canada’s lowest per-person program spending, including the lowest per-person investment in health care. There’s a reason school repairs are backlogged and hallway medicine has made a comeback.
Now a 15 per cent cut threatens to take people from bad to worse. Already, Ford has cut $330 million a year from mental health and $100 million from school repairs.
As quick fixes to past tax cut-induced deficits, the last Conservative government privatized Highway 407. The Wynne Liberals sold Hydro One. Now there’s a new risk of asset sell-offs, including Toronto’s subway system, which Conservatives say they will take from city council’s control.
Working-class people are already struggling with low wages, no benefits and unaffordable everyday life. The middle class worries what society they are leaving the next generation. Now this.
All over again, now in a different way, it’s promises for the few — paid for by the people.
Tom Parkin is a social democratic political commentator based in Toronto.
https://www.thestar.com/opinion/contributors/2018/09/26/provincial-spending-cuts-will-take-people-from-bad-to-worse.html
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