Ontario tightens purse strings, Tories don't plan to balance books until 2023-24

TORONTO -- Ontario's books won't be balanced within the Progressive Conservatives' mandate, but the government's first budget serves up an era of gradual belt-tightening with a side of booze.

The Tories peg the current deficit at $11.7 billion, and they don't expect to eliminate the red ink until 2023-24. Drastic and widespread cuts that many had feared did not materialize in this budget, but the path to balance shows that much of the heavy lifting comes at the halfway mark to the next election, and after it.

The budget constrains spending growth -- and shows cuts in post-secondary and social services -- but is still nearly $5 billion larger than the last budget from the previous Liberal government, who the Progressive Conservatives often slam for their spending habits.

"We have developed a reasonable path to balance," Finance Minister Vic Fedeli said. "Our path to balance in five years is a thoughtful and a measured approach to take ... Our entire premise is to protect what matters most."

Program expenses will rise over three years by an average of 0.8 per cent, compared to the 3.3 per cent in growth that the former Liberal government planned.

One new goodie is a child-care tax credit, providing up to $6,000 per child under seven and up to $3,750 per child between seven and 16, on a sliding scale for families earning less than $150,000 annually. It's expected to cost about $390 million a year. They are also promising to create 30,000 child-care spaces over five years.

Free dental care will also be provided for low-income seniors.

The government is also loosening rules around alcohol, allowing municipalities to legalize drinking in parks, letting licensed establishments start serving alcohol at 9 a.m., permitting happy hour advertising, and legalizing tailgate parties. The government also intends to put beer and wine in corner stores.

The opposition parties questioned why Premier Doug Ford's government was "obsessed" with booze.

The budget also reveals a new Ontario trillium logo -- virtually identical to a previous iteration -- as well as a largely blue licence plate redesign and an accompanying new slogan, "A place to grow." The government spent $500,000 on a consultation on branding, but has a new contract for licence plate production that saves $4 million.

NDP Leader Andrea Horwath said the blue licence plate is obvious Conservative branding.

"It is ... use of public money for partisan purposes," she said. "It's just shameful that this is a priority of (Premier) Doug Ford, to have his ego on the back of everybody's car."

"I think it will cause a lot of rear-ending," she joked.

But Horwath said that even in areas where spending is increasing, it's mostly below the rate of inflation, which she said amounts to cuts.

Hospitals are getting an additional $384 million, which amounts to an increase of 2.05 per cent, but the Ontario Hospitals Association had said the sector needs a 3.45 per cent increase to maintain staffing levels.

Overall health spending is set to rise over three years by a modest annual average of 1.6 per cent, with Ontario's move to roll more than 20 health agencies into one expected to save $350 million a year by 2021-22. Moves billed as "workforce productivity," such as reducing overtime, are expected to save $250 million a year.

Education spending is set to rise by 1.2 per cent, but that growth is largely due to higher student enrolment, instead of new programs. Ontario recently announced a host of education changes, including larger high school class sizes, which sparked widespread anger.

The post-secondary sector will see funding cuts, with spending dropping one per cent on average for the next three years, largely due to changes to student financial assistance.

Universities and colleges will also see more conditions on their money, with up to 60 per cent of post-secondary funding tied to institutional performance over the next five years. The government could not specify what criteria will be used to evaluate performance, saying it will work with institutions to develop them.

Changes such as social assistance reforms, closing spaces and facilities in the youth justice system, and "streamlining" administration are expected to help reduce children's and social services sector costs by $1 billion -- or two per cent -- over three years.

The justice sector is expected to see about two per cent in cost cuts too, including changes to legal aid and victim compensation services and amalgamating adjudicative tribunals.

Ontario has also started looking at how to constrain growth in public sector wages.

For businesses, faster write-offs on capital investments are expected to provide $3.8 billion in corporate tax relief over six years. That allowance is instead of cutting the corporate tax rate from 11.5 per cent to 10.5 per cent, as the Tories had promised in the election. They say this move will benefit businesses more.

The budget contains no new taxes. In addition to tackling the deficit, the government is also taking aim at the net debt -- currently pegged at $343 billion -- through ensuring surpluses and unused reserve or contingency funds go to paying it down.

As well, planned legislation would require the government to develop a debt burden reduction strategy, and make the premier and finance minister pay 10 per cent of their salaries for each missed reporting deadline for documents such as the budget and quarterly economic accounts.

BUDGET HIGHLIGHTS

PATH TO BALANCE

The Progressive Conservatives are promising to balance the province's books in five years, which means they don't plan to eliminate the deficit within their term.

The Tories say they've managed to cut the deficit to $11.7 billion -- a $3.3-billion reduction -- since taking office last summer.

The government says it plans to trim another $1.4 billion from the deficit in 2019-20, $3.5 billion in 2020-21 and $2.1 billion the following year.

In 2023-24 -- after the next election -- the province says it will cut spending by $3.8 billion, leaving it with a surplus of $300 million.

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CHILD CARE

Families with incomes of up to $150,000 will receive child-care support in the form of a new tax credit.

The government says the credit -- dubbed the Childcare Access and Relief from Expenses credit, or CARE -- is retroactive to Jan. 1 of this year.

It says on average, eligible families will receive about $1,250 in new child-care support through the program, which is expected to cost roughly $390 million each year.

Parents would need to keep the receipts for the child-care expenses they incur.

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POST-SECONDARY FUNDING

Colleges and universities will see more of their funding linked to performance outcomes over the next five years.

The government says it will negotiate new agreements with the province's 45 publicly assisted post-secondary institutions by the end of next March, and outcomes-based funding will be part of that.

It says that for years, performance has affected a small proportion of post-secondary funding -- 1.4 per cent for universities and 1.2 per cent for colleges.

But the province says the first year of the new agreements will tie 25 per cent of funding to performance outcomes, and that proportion will increase annually until it reaches 60 per cent in 2024-25.

The government is also planning to amend legislation to give itself the power to address the fact that some post-secondary faculty are collecting salaries and pension payments at the same time.

It says the Ministry of Training, Colleges and Universities will consult with the post-secondary sector on how to deal with the issue.

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ALCOHOL REFORM

Rules around the consumption and sale of alcohol are changing, and the government says it's working on more reforms on the issue.

The province says it will introduce legislation allowing municipalities to pass laws permitting people drink in parks or other designated public areas.

It is also permitting licensed establishments like bars, restaurants and golf courses to serve alcohol starting at 9 a.m. every day, and says it will consult on extending the hours further.

Bars and restaurants will also be allowed to advertise "happy hour" specials.

Those changes are expected to take effect by the summer.

The province also intends to allow corner and big box stores to sell beer and wine, as previously pledged.

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CORPORATE TAXES

The Progressive Conservatives promised during the election campaign to lower the corporate tax rate but now say they're offering a number of incentives instead that will save businesses more money.

They say allowing faster write-offs on capital investments will provide Ontario businesses with $3.8 billion in corporate tax relief over six years.

They also say cutting red tape will save businesses hundreds of millions in compliance costs.

The Tories had pledged to cut the corporate tax rate to 10.5 per cent from 11.5 per cent.

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AUTO INSURANCE

Motorists may soon be able to show proof of insurance electronically.

The government says it will introduce legislation to make auto insurance simpler, including electronic means of communication.

It says insurance forms, policies and other documents will also be simplified so drivers can make informed decisions more easily.

The province is also reverting back to the default benefit of $2 million for those who are catastrophically injured in a collision, after it dropped to $1 million three years ago.

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LICENCE PLATES AND LOGO

Ontario's trillium logo has been revamped as part of the government's rebranding efforts.

The government says existing "visual identifiers" across the public service will be retired and replaced with variations of the new trillium.

It says a new directive will prohibit spending taxpayer dollars on new logos or other visual identifiers from now on.

The government makeover will also affect driver's licences and licence plates once the existing stock is used up.

Licence plates will also bear a new slogan -- "A Place to Grow" -- which will replace the current "Yours to Discover."

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ESTATE TAX

The province is eliminating the estate administration tax next year for all estates with assets of $50,000 or less.

The government says about 2,500 out of the roughly 30,000 taxable estates in the province will be exempt from the tax.

Those worth more that $50,000 will see the tax reduced by $250.

People will also have more time to file the information for the tax.

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NORTHERN ONTARIO

The government is looking into ways to improve transportation in Northern Ontario.

It says a review is underway to identify opportunities for a modern and sustainable transportation system in the North, including options for passenger rail service.

The review will also look at how to support rail freight and repair operations in the North.

There will also be some financial support for Northern universities and colleges to help them adjust to a 10 per cent tuition rate reduction announced this winter -- a revenue loss institutions are expected to absorb.

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OPPOSITION REACTION

New Democrats are sounding the alarm about what they call deep and cruel cuts in the Ontario budget.

NDP Leader Andrea Horwath says the Tories' first fiscal plan is squeezing the education and health-care sectors so their funding won't even keep up with inflation.

Horwath says social services will also take a hit, putting the province's most vulnerable residents at risk.

The opposition parties also questioned why Premier Doug Ford's government was "obsessed" with booze.