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Ontario’s Magical Mystery Tour Budget

You could be forgiven for thinking that happy days were here again if you listened to Ontario Finance Minister Charles Sousa table his budget in the legislature. He was positively exuberant, hissing out Yessss!! every so often after announcing yet another initiative. Occasionally, he even turned to his colleagues on the back benches to give a thumbs up.

You could also be forgiven after reading his budget if you thought it was his middle finger he was raising and not his thumb.

This is a budget that tries to be both austere and extravagant at the same time. A finance minister can internally hemorrhage trying to pull that off although that didn’t happen. Mr. Sousa could barely contain his excitement as he unveiled his financial plan for the province.

The deficit will be reduced to $8.5 billion from $10.9 but this is mostly thanks to diverting some federal health care transfers to general operating and the sale of a good chunk of Hydro One. It also projects a pretty aggressive growth rate of 2.9% for the provincial economy which may be fairly close but doesn’t leave much room for error in a period of economic instability. Reducing the deficit by $1.4 billion is a good thing but it still leaves Ontario with a deficit that is half a billion higher than the combined budget deficits of all of Canada’s other provinces.

That isn’t, however, preventing the Wynne Liberals from going on a spending spree.

More than $130 billion will be spent on infrastructure over the next ten years. It sounds great but nobody has control over what will happen in two years let alone ten and projecting spending that far down the road as part of an annual budget is just so much bafflegab. Governments these days don’t seem to be able to grasp the concept that an annual budget is about the current year’s expenses and revenues not day dreams about a decade or two from now.

As Andrew Coyne pointed out in a recent column, no government can commit a future government to anything and God knows we’ve all seen more than ample examples of that in our lives.

It hasn’t dissuaded the Liberals from making grand pronouncements in this budget, however, no doubt to obscure some of the harsher realities for the current year that are also in the budget.

There are no new taxes in the budget unless you count a new tax on beer and the constantly increasing hydro rates. Hydro rates aren’t officially a tax, of course, but the surcharges attached to the highest rates in the country must surely feel like a tax to the people of Ontario. Those rates will rise by another 5% in a couple of months.

The increase in health care spending will be restricted to 1.9% which flat out robs Ontario’s taxpayers in order to cover up the fiscal mess the Liberals have created. One of the things the Harper government did get right was to stabilize health care funding with guaranteed annual increases to health care transfers to better enable provinces to plan longer term. This year the federal government will increase the health care transfer by 6% but the Wynne government will only increase health care spending by 1.9%. One assumes the rest of the increase will be diverted to general operating funds.

Hospital budgets remain frozen. Doctors and nurses are seeing rollbacks in their salaries which is starting to drive some of them out of the province. That increases wait times in hospitals and reduces the number of available doctors for families. Currently there are approximately a million people in Ontario without a family doctor.

The diverted health care transfer and some of the money from the sale of a good chunk of Hydro One will be used to meet projected cuts to the budget deficit. The balance will go into this year’s share of infrastructure and transit spending.

And that, my friends, is just one more bit of sleight of hand that distracts you with a big announcement while sweeping reality under the carpet.

Mr. Sousa was quick to point out that the Ontario Liberals would not take a slash and burn approach to deficit cutting and he was more than right. Major program spending totals $120.9 billion. The remaining other programs will see their budgets cut by 5.5% which sounds fairly impressive until you do the math. That other program spending totals only 16% of the total budget which means an overall cut of 0.88% in government expenses.

I believe that probably does qualify as not taking a slash and burn approach although I’m not sure it actually qualifies as cutting anything and that begs the question.

If the only way the province could meet its projected program spending and its deficit reduction targets was by redirecting health care transfers and selling Crown assets, what do they do next year?

Selling your car to make this year’s minimum monthly credit card payments doesn’t do much for next year if you haven’t seriously reduced your overall debt load and brought your spending and income into line. Selling assets will buy you some time but unless you address the underlying issues, you’re simply delaying the inevitable.

The simple fact is that the Liberals have completely divorced themselves from reality and are on the fast-track to Never Never Land.

They have successfully increased the total provincial debt by approximately 115% since coming to power. As a percentage of provincial GDP, the debt has risen from 27.5% to almost 40% today. More than $11 billion will go to servicing that debt and even a modest ½ point increase in interest rates will add a billion to that number.

Both Charles Sousa and Kathleen Wynne have compared Ontario to California although only they and God know why especially when you realize that on a per capita basis, Ontario is carrying three times the debt of California.

This hasn’t dissuaded the Liberal government from its mission whatever that is. A new Cap and Trade program will be instituted at an unpredictable cost and uncertain result. A new provincial pension plan will also be created to take yet more money out of the pockets of taxpayers for their own good and, of course, to help finance a new bureaucracy to administrate it.

My father used to say that you couldn’t turn a sow’s ear into a silk purse and the self-congratulatory rhetoric of yesterday’s budget was a failed attempt to do exactly that, a sow’s ear presented as a silk purse.

I criticized the federal Conservatives for their tricks and handouts in Tuesday’s federal budget and I make no appology for it but at least there was some semblance of reality in their budget even if I didn’t agree with the cynical politics. But the Ontario Liberals are on a Magical Mystery Tour. They have no sense of priority, no concept of the damage they’re doing to the province or the difficulty in which they continue to place an increasing number of families.

They are lost in a fool’s dream.

It’s all about the Wynne vision and that vision is some kind of far left trendy Utopia, There isn’t much point to spending billions to accomplish it if you bankrupt the province and most people living in it in the process. Driving business out of the province with outrageous electricity costs and excessive regulation is not the road to salvation.

What Charles Sousa tabled in the legislature yesterday was less a budget or even a road map into a more prosperous future. It was just more political sleight of hand masquerading as responsible government.

It’s small wonder that companies like Toyota are moving to places like Mexico and taking their jobs with them. You can only take stupidity for so long before you have to do a reality check, take a shower and move on.

It’s unfortunate at least one of the corporations that are relocating won’t take the Wynne Liberals with them when they leave.

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© 2015 Maggie’s Bear

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Twitter: @maggsbear – Facebook: Maggie’s Bear  – ivmaki@sympatico.ca

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  • 2484351

    Canada has one of the most inflates if not inflated housing markets in the world. Sad part is when the market crashes very shortly and the 7.5 year itch starts next week things will become very ugly very fast and nobody will have any money when nobody has a job. here in the States to many people are being laid off by the thousands right now in every capacity in every job and all is being buried by the media. The ” Everything is Awesome!” Slogan is a farce. Worse macro data since the financial crash and now all signs point to a crash in the market any day and the Goverment of both Countries continue to lie . Delusional? I would say so .

    • MaggiesBear

      The housing issue only applies in certain cities like Toronto and Vancouver. In Ottawa, Canada’s capital, housing prices remain fairly stable and rose less than 1% in the past year.

      • 2484351

        Now That is something the media has buried. Thank You for that info. Well needed

  • Pingback: Ontario’s Magical Mystery Tour Budget | Grumpy Opinions()

  • charlie98

    Health care funds from the Feds to the province should only go for health care. Those of us who don’t live in Ontario should not be funding Ontario debt reduction. Ontario created this problem, has voted multiple times to keep those who created the problem in power, and should not be using the rest of us to solve a problem of their own creation.

    • MaggiesBear

      We pay the same no matter how the money gets used by the Liberals. It’s the people of Ontario who are being robbed. It’s just one more cynical government move in a very long line of cynical government moves.

  • oldwhiteguy

    a brief look at some of the numbers shows that they are actually increasing spending. just as the conservatives did federally. I wish I could have used such creative accounting when I was in business.

    • MaggiesBear

      That was my point about the federal budget, it’s not what first glance promises. In fact, both the Conservatives and the Ontario Liberals have introduced fairly similar budgets although the Liberals win hands down on self-delusion.