Wynne’s First Budget

Premier Kathleen Wynne (OLP – Don Valley West) and her Liberal government released their budget last week. In a minority legislature the Liberals will depend on the backing of the ONDP to survive and avoid an election. To win support the Liberals made serious concessions to the NDP. In the Toronto Star Martin Regg Cohn referred to this budget as a “NDP budget”.

The Ontario Liberals agreed to the NDP’s demands to cut auto insurance by 15%, expand welfare benefits and increase funding to reduce youth unemployment. As a member of the NDP I’ve heard a great deal about the first and third point. They were definitely the main thrust of the NDP demands.

The budget also revealed deeper concerns. Economic growth is predicted to slow even further in Ontario. Finance Minister Charles Sousa (OLP – Mississauga South) projected only 1.5% growth in Ontario’s economy over the next fiscal year. This is largely attributed to the continuing sluggishness in the United States. I often look at the economy as a Keynesian, and so I cannot help but hope that if we figure out how to fund Metrolinx’s Big Move it could help stimulate the economy.

The deficit still exists, and is projected to remain until 2017-2018, at the end of which the province will have $300 billion in debt. That is a truly terrifying amount of debt. There are other sources for revenue. Regg Cohn points out that with the lowest corporate taxes in the region other subsidies should not be needed any more. Nearly a billion dollars could be recovered by ending subsidies.

While Andrea Horwath (ONDP – Hamilton Centre) and the ONDP have the make a decision, Forum Research released a poll showing 48% of Ontarians want them to back the government. I think the NDP have limited choice but to back the government given the concessions that have been given. I also believe it would be strategically wise for the NDP (my party) to hold off calling an election now.

This is a political budget, some of the policies in it may be less than wise because it is designed to be able to win multi-party support and be defendable in an election. It would be a bad time to have an election. The issue I’m most mindful of now, infrastructure and public transit, is about to move forward with Metrolinx’s report on how to fund the projects. I’m desperately hoping that the government will be able to find support in the opposition and advance a solution to the gridlock crisis. Basically we need to end gridlock to end gridlock.

I could be wrong. Perhaps we should have an election, clear the air, let one party get a false majority and rule without question. My fear is that majority governments are less swayed by public pressure, and at least in this moment if the people demand a solution at least one of the three parties can start pushing for it, and perhaps achieve it. In a minority the people are rendered effectively voiceless as politicians become less accountable. I still believe that minority governments can work, I hope our political leaders believe so too.

Bankrupting Brampton and Cities

Today I was going through the Brampton Guardian when I got to the Commentary page. Terry Miller, a columnist with the local paper, was discussing Brampton’s budget, link here. Reading Miller it seems that Brampton is faced with the same budget issues it is always faced with. Funding is allocated, there is a proposed property tax hike and while the budget is mostly set there is a massive gaping hole in the projections.

The reason for this is simple – capital funding. Financing the expensive business of building/maintain roads, bridges, and other basic infrastructure is immense. It is critical because a basic level of infrastructure support is necessary for the stable operation of a city. In the case of a city like Brampton, which is undergoing rapid expansion, makes these gaps acute.

Brampton is (tragically) not alone in this. The cities in Ontario and across Canada are dependent upon the support of the provincial and federal governments. However, unlike in American jurisdictions these commitments are not made consistently or within a concrete framework. The city (and others) rely on one-time transfers. As Miller puts it, “The current budget makes the best of what is available but doesn’t provide for the future except for a 1% tax transfer into infrastructure spending, federal gas tax sharing, which could change up or down, and federal provincial infrastructure funding schemes that are usually project based and most often require local financial participation…usually 1/3. But the sources of revenue won’t match the need to keep building the services needed to service this city. Added to those problems are the city’s share for the new Peel Memorial Hospital and Highway 10 transit requirements soon to be unveiled by Metrolinx.”

The funding expected from these sources and the expected growth of expenses in Brampton do not come close to matching one another. In less than a decade the shortfall will be roughly a billion dollars that the city alone will have to meet.

The city does what it can to keep taxes low. Brampton, like all local governments in Ontario, is dependent upon property taxes which are highly regressive and punishing to property owners. Sources of revenue such as development fees will one day vanish as the last green-field site turns into homes. Brampton fights to maintain a balanced budget and to not borrow money, but it is left with few choices.

Why do the federal government and provincial governments refuse to support cities? Canada is an urban nation, and despite the need for basic services the higher levels of government choke resources from our local institutions. The Ontario and Canadian governments need to take cities more seriously if they are to thrive and serve their residents. Bankrupting the engines of our economy will do little to solve the bottom line for the province or federation.

Hot Tempers and a Summer Election

As the debate over the federal budget comes to a close the rhetoric over Ontario’s budget is heating up. Steve Paikin of TVO did a far better job than I could at summarizing the controversy, but I will do my best. A few weeks ago Andrea Horwath (ONDP - Hamilton Centre), leader of the NDP, managed to extract some concessions from Dalton McGuinty’s (OLP – Ottawa South) Liberal government’s budget. It was a tense negotiation and the ONDP were able to extract a few concession, including a significant new tax to offset spending cuts.

When it came time to support the bill in the Legislative Assembly the ONDP abstained from voting, allowing for the superior numbers of Liberals to outnumbered the Progressive Conservatives and pass the budget. This tactic also gave the ONDP deniability to the budget, as it did not pass with their support.

The budget then moved to the finance committee where Ontario New Democrats made several amendments to the budget with the support of the Progressive Conservatives. The Liberals claimed that this was a breach of Andrea Horwath’s promise to pass the budget. On Monday Premier McGuinty threatened to call an election if amendments were made. The Opposition called his bluff and eliminated five sections of the budget.

That being said, it appears the budget will pass tomorrow and Ontarians will be spared an election. Watching this debate unfold in social media was interesting. Those allied in common cause to fight the federal Conservative budget quickly turned on each other and sniped at one another over this Ontario dust-up. The differences between Liberals and New Democrats once again became quite clear, and on some level that made me sad.

The discussion around the Ontario budget, in my opinion, has been flawed. Criticism has been harsh against the Ontario New Democrats, and relatively silent about the Progressive Conservative Party of Ontario. If the PCs did not side with New Democrats on the amendments they would not have passed. One might have thought this was a carefully constructed plan. Especially given how many of the amendments went against Tory policy. From very early on Tim Hudak (PCPO – Niagara West-Glanbrook) has refused to participate in the process.

Recent polling has the three parties in Ontario virtually tied. The PCs lead in the mid-30s, the NDP around 30% and the Liberals in thehigh-20s. All parties risk a great deal with this budget brinkmanship. The fortieth Legislative Assembly of Ontario may not be long for this world, while it may survive the dog days of summer, the fall may see us going back to the polls.