The Ford government has cut the deficit, from $15 billion to $11.7 billion in its first year, fuelled by rising tax revenue, cuts outside health and education, and attrition in the civil service. However the cuts are blunted by a variety of handouts for working parents, seniors and corporations.
The deficit for 2019-2020 shrinks further to $10.3 billion, with a surplus of $300 million projected by the 2023-2024 fiscal year.
«This is both reasonable and responsible,» Finance Minister Vic Fedeli told reporters Thursday. «This is also a budget that includes no new tax increases, not one. In the short time we’ve been in office the deficit has been reduced by $3.3 billion.»
Fedeli was able to come through with both a reduction to the deficit along with tax cuts due to a $4.1 billion increase in personal and sales tax revenues over the past year, roughly 2,000 Ontario public servants who have retired and not been replaced, and plans for $1.7 billion worth of cuts to the justice, post-secondary and social service sectors over the next three years.
For the first time, parents with children in daycare will be able to receive up to $6,000 per child under the age of seven in the form of an income tax credit. Children aged 7 to 16 are eligible for up to $3,750 per year.
The credit is geared to income and families earning more than $150,000 will receive nothing. An average family is expected to receive a credit worth $1,250. The credit will cost the province $390 million per year.
«All of this is done while protecting frontline jobs and our government is investing one of the most flexible childcare programs ever introduced in the province,» Fedeli said.
In a bid to keep tax rates for businesses competitive with U.S. states in the wake of the Trump tax cuts, the Ford government plans to spend $1.4 billion in accelerated capital cost and depreciation allowances starting this year, allowing businesses to write off some or all of their purchases on their taxes.
«When we consulted with them, this is what they wanted, they wanted it now,» Fedeli said of business groups he met with since taking office.
In addition to an already announced tax credit for minimum wage earners, seniors with low incomes will receive free dental care. Together the measures will cost $585 million this year.
NDP Leader Andrea Horwath said the budget is filled with drastic cuts, and that even in areas where spending improves, the increases do not keep up with inflation.
«We went into this budget expecting deep cuts, but what we didn’t expect was the level of irresponsibility and outright cruelty that we see in this budget. Doug Ford is taking away things that you and your family depend on.»
Liberal interim leader John Fraser said the budget makes the province’s fiscal position look worse than it is.
«Doug Ford has inflated the size of the deficit to create a pretext for cuts, cuts that are going to hurt.»
Deep cuts in some areas
The net provincial debt stands at $343 billion this year, and is expected to rise to $382 billion by 2021-2022.
To pay for the new measures and reduce the deficit, spending growth will be constrained or completely cut in almost every ministry.
The health ministry will see spending growth of only nine per cent over the next five years, while education spending will grow by only 1.3 per cent over five years.
«We are looking at every program, every agency, every board, every commission to find efficiencies,» Fedeli said, insisting the cuts will not impact quality of services delivered. «Our government has found eight cents on every dollar spent.»
But even inside healthcare, steps are being taken to slash costs.
For instance, the province’s 35 public health units will be merged into 20, saving $200 million per year by 2021-2022.
Outside of health and education, some of the cuts are bleak.
Indigenous Affairs will be cut nearly in half, down to $74.4 million from $146 million last year.
Municipal Affairs and Housing loses $366 million, going from $1.48 billion to $1.12 billion. Energy, Northern Development and Mines loses $572 million.
The Ministry of Environment’s budget shrinks by a third, going from $983 million to $631 million.
«They are cutting everywhere,» Horwath said. «This budget is punishing every single Ontarian.»
Beyond the more than 3,000 teacher positions to be eliminated over the next four years, an additional 2,000 members of the Ontario Public Service have retired this year and will not be replaced.
Additional civil servants will leave government this year as part of a previously announced voluntary buyout program.