Ontario budget: Debt nears $300B
When the going gets tough, the tough go shopping.
Ontario Premier Kathleen Wynne is going on a $130-billion infrastructure spending spree even as the province’s net debt tracks toward the $300 billion mark.
“It’s all about building Ontario up,” Finance Minister Charles Sousa said. “It’s the largest infrastructure build in Ontario history.”
Funds for the infrastructure budget come from a variety of sources — mainly the partial sell off of Hydro One and cashing out of GM shares.
The government is also planning to dedicate revenue from future High Occupancy Toll (HOT) lanes.
While details were not available Thursday, it’s likely that High Occupancy Vehicle (HOV) lanes planned for Hwy. 404 (Hwy. 407 to Stouffville Rd), Hwy. 427 (Hwy. 407 to Hwy. 7) and Hwy. 401 (Credit River to RR 25) would be turned into money-generating toll lanes to pay for more infrastructure.
The Wynne government is planning infrastructure improvements across Ontario with public transit for the Greater Toronto Area and other urban areas, and roads and bridge overhauls in other parts of the province.
As expected, the Ontario government will allow beer sales in grocery stores.
Progressive Conservative MPP Vic Fedeli said he believes the infrastructure investment is a “shell game” where public assets are being sold off to balance the government’s operating deficit.
The budget forecasts that the government will continue to run a deficit for the next two years, putting $8.5 billion on its credit card in 2015-16 and another $4.8 billion in 2016-17 before balancing the books.
To achieve these operating budget targets, the province intends to find $500 million in unspecified “savings” in each of the next three years, and growth in health care spending would be capped at an anaemic 1.9% a year.
Public sector workers would have to settle for no overall increases in compensation.
Even with these restraints, Ontario’s net debt is projected to hit $319.5 billion by 2017-18, more than doubling since 2006-07.
PC Interim Leader Jim Wilson said the government has overspent its way into a corner and that cuts to service are inevitable.
“How many people are going to lose their jobs,” Wilson said. “We’ve already seen, according to the Ontario Nurses Association, 409 nurses since February, registered nurses across the province, lose their job.”
NDP Leader Andrea Horwath said the budget helps the wealthy while raising costs for average Ontarians.
Nurses and teachers get the cut, while bankers get a stake in the publicly owned Hydro One, she said.
While the government intends to spend $130 billion over 10 years across Ontario on infrastructure, such as public transit, roads, bridges, water systems, hospitals and schools, the funds to actually operate health care, education, transit and other public services are in much shorter supply.
As an example, the Ontario budget provides $11 billion in capital grants over the net decade for redevelopment of hospitals in Milton, Burlington, Thunder Bay, St. Thomas, Ottawa and Etobicoke.
The government refused to tell the Toronto Sun Thursday how much money it plans to give hospitals for operating funding to cover its expenses such as keeping the lights on and nurses at bedside.
Generally, hospitals have been given far less than typical inflation in the health sector, and any compensation increases for staff have to come out of their budgets too.
Ontario spends less per person delivering services than any other province in the country, but has a higher annual operating deficit.
Annual interest payments on debt are $11.4 billion, growing to $12.4 billion and $13.2 billion in subsequent years.
Overall spending on programs rises by just 0.9% between 2013-18, but spending on debt servicing rises by 5.7%.
Revenue to the government in 2014-15 came in under projections by $354 million, partly as a result of a lower growth in wages and a drop in tobacco taxes.
Ontario Power Generation and Hydro One, which is being put up for sale, actually produced more revenues for the government than expected.
Meanwhile, the government spent $248 million less than budgeted on education and $243 million less on children’s and social services due in large part to a lower-than-expected uptake in benefits.
Do you believe Premier Kathleen Wynne when she says her government will balance the budget by 2017/18?