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The Ontario Provincial budget appeared last week to little fan fare, even though it looks to me like an austerity budget ( the media has dubbed it a Tory budget) and a long-term austerity plan, trying to balance the ever mercurial Ontario Budget (i.e. Ontario’s economy has been up and down like a dory in 20 foot swells).

If you use public transit (as you should (but I don’t)) there is money there for new programs (in Toronto) but not much for other areas. I suppose they could have cut Ottawa’s Light Rail money, but there doesn’t seem to be money there for the inevitable “expansion” of the light rail program here (but then again, is Ottawa actually in Ontario? Lots of folks in Toronto don’t seem to think so).

The major selling point of this budget is the attempt to balance Ontario’s Provincial Spending:

The deficit for 2014–15 is now projected to be $10.9 billion — a $1.6 billion improvement compared to the 2014 Budget forecast. Together with prudent fiscal management and actions to find smarter and better ways to deliver programs and vital public services that people rely on, Ontario remains committed to eliminating the deficit by 2017–18.

That is a very aggressive goal, and they are going to try to do it on the back of their major allies, the Provincial Public Service and Teachers’ Unions, and that is where they may end up with some problems (given the strikes already being called by the teachers). Could be some very unsettled labor issues for the next little while (given the assumption is no pay increases until the budget is balanced (effectively)).

Lots of other fixes that don’t cost much on Social Spending areas, but not a lot, given the austere plans the government has for its future. Some more help for post-secondary education grants (not a bad idea to slow down the creation of a Generation of Debtors, whose major lender is the government).

Where does Ontario borrow its money from?

Borrowing, Ontario Style

Who does Ontario Borrow from ?

And how much is Ontario paying in Debt financing charges?

Ontario Debt finance charges

Interest Expenditures for the Ontario Debt


The Liberals re-introduced the budget that caused the “immaculate election of 2014“™  and the ensuing Majority Liberal Government, however, the reactions to this budget have been mixed.

Some of the economic pundits claims the ramifications of this budget is best described in the following video:

While I feel that is a slight over-reaction, I cannot argue that there are some interesting economic items in the budget.

Enough jocularity, the Video is of the demolition of the Sir John Carling Building here in Ottawa (courtesy Fernando Matias ) but when I saw it and then started reading the reactions to the budget I just could not resist mashing them together.

 Real Budget Highlights

So you can read the Budget here (and I strongly suggest you do so, so you are informed).

  • $2.5 Billion dollars over 10 years to create a Job and Prosperity fund
  • $130 billion in public infrastructure over the next 10 years
  • Birth of the Ontario Retirement Pension Plan , this is gonna be interesting, the details are a bit thin, but do we need it in Ontario? That remains to be seen. Quebec has a Pension Plan, maybe (or maybe not) Ontario needs one too?
  • Lowering Energy costs in some fashion, but given the amount it has gone up thanks to previous budgets, maybe we needed that?
  • Minimum wage is going up to $11 an hour
  • Balanced budget by 2017 (wow)
  • And more taxes for you rich bourgeoisie who make more than $150K (stop oppressing the proletariat).

The really interesting part was at the end of the highlights section:

Going forward, the government will:Introduce an annual program review savings target of $250 million for 2014–15 and $500 million in each of 2015–16 and 2016–17.

  • Introduce an annual program review savings target of $250 million for 2014–15 and $500 million in each of 2015–16 and 2016–17.
  • Continue the call to freeze the Members of Provincial Parliament’s salaries until the budget is balanced.
  • Directly control the compensation of senior executives in the broader public sector, subject to passage of legislation.
  • Hold the average annual growth in program spending to 1.1 per cent over three years.

This is where the Devil is in the details, freezing MPP’s salary is window dressing, however, “Controlling” the senior Execs compensation could be interesting. What is a Senior Executive? Could make for some interesting discussions, and how are you going to hold growth to 1.1 % without either:

  • Freezing Provincial Civil Servants income (including Teachers)
  • Laying off a large amount of the work force
  • Finding new income sources

I wish Premier Wynne luck on this one, could be quite interesting.


In Ontario we TAX the Rich!

Let me clarify the statement, in a move to make sure their budget gets passed the Provincial Liberals have succumbed to a threat by the NDP to defeat the budget if there was not a tangible tax on the rich, and thus the Liberals have announced a Two Percent Surtax on those earning more than $500,000 a year.

How to rationalize this change of decision:

“They wanted a tax on the rich. I want to pay down the deficit faster,” said the Premier.

Thus the $470,000,000 estimated extra income will be put directly on the deficit, so McGuinty gets to live another day, and portray himself as a fiscal conservative while taxing the rich. A very interesting twist on the Liberals platform.

So the highest provincial tax rate is now 48.5% (up from 46.5%), anyone care to comment? Even though I earn some good coin (in my REAL job, not here), there is no danger of me having this tax inflicted on  me, but I am curious to hear if I have any readers who are in this tax bracket (or know folks who are in this bracket) and what they think of this interesting new tax?

Is it a good thing that the Ontario Government wants to Eat the Rich?


Ontario’s Budget: Fodder ?

So was the McGuinty 2012 Liberal budget a bit of fodder or does it really have a goal?

After reading over the government’s information, there are some interesting points to watch and see if they follow through:

  • …$4.9 billion in planned savings from removing overlap and duplication, implementing more efficient delivery models and focusing on core business…“, so there is a bunch of duplication of services out there that can be slashed away? I’d be very curious to see the specifics on that one.
  • … $6 billion in government actions to restrain compensation for school boards, payments to physicians and others in the public sector…“, so how the “Education Premier” lines this up with his “Pro Education” stance I am not sure.
  • Pay Freezes for MPPs, Execs at Hospitals, Universities and other places. I think the MPP pay freeze is an important bit of “optics” that they need to try to sell this austerity budget.

I would strongly suggest you read through the Government’s literature, it is worth reading over once to see if you are directly affected by this (and you most likely are).


That is the question that pops into my head. If this was a majority government, I would say it is the typical McGuinty trick of giving voters all the “bad medicine” at the beginning of their mandate, so you might forget later, but this is still a Minority government (only 1 or 2 votes short of a majority, so an interesting Minority, but still a minority).

So my guesses on this are the following:

  1. The Ontario Liberals think that the voters have “punished” them already, so if they push and get another election soon, they might get a majority this time? The argument would be, “we didn’t want this election, sorry, remember we are the good guys”.
  2. McGuinty has a “turncoat” in the wings ready to come across (ensuring a majority) and thus this is the normal “front loading” of bad news from the Ontario Government. Note they didn’t implement the wholesale cuts recommended by the Drummond Report, so that seems to have been a well placed red herring as well.

Either way, it looks like Ontario politics continues on, whether this budget actually comes to pass will be an interesting story. Any other possibilities I might have missed?

We await the “Harper Government Budget 2012” as well, but in the Federal Government’s case, they can use as big a stick as they want to bash the heck out of the Government Infrastructure (in general) and Civil Servants (in specific).


Cutting Ontario’s Services?

Last week, Premier Dalton McGuinty proved he does have a sense of humor, when his Government’s hand-picked “cut-meister” Don Drummond, published a set of ideas for ways the Government could save money and avert a financial apocalypse that is predicted for Ontario.

The list of cuts is broad in spectrum, and heavy-handed at best, and at worst it is Big “C” Conservatism (if not totalitarianism), but will these cuts actually transpire as they have been laid out?

A simple cursory view of the carnage that is predicted, will be no, for several reasons, but a few that I can think of would be:

  • It recommends ending all day kindergarten (recommendation 6-11), which is Dalton McGuinty’s baby, so that is not going anywhere (unless the conservatives get into power).
  • Cut funding of education system which would force more parents to have to pay for more supplies (recommendation 6-17). Seriously? We are going to make parents pay more for PUBLIC schools?
  • Cutting school bus funding (recommendation 6-16), I think that is a great idea, since I have had to pay for my kids’ busing costs for years (8 to be exact).
  • Plenty of really interesting discussions about alternate care ideas in the medical system and how to cut costs (Section 5 of the recommendations). There are so many, I don’t dare mention them. The best quote I can give you is:
    • The quality of care can and should be enhanced despite the need to restrain increased spending; the objectives of quality care and cost restraint must go hand in hand.
      WHAT DOES THAT MEAN? We should have a great system, even though we are going to cut the hell out of it?!?
  • Section 7 for post secondary institutions is effectively fantasy, imploring Universities to break existing bargained agreements with staff ( 7-2 ) and also to fire incompetent teachers (7-10), it’s fun to read.
  • Social Programs you ask? Section 8 starts with:
    • Hold growth in social programs spending to 0.5 per cent per year.
      And the best of British luck to you on that one.
  •  Get to Section 12 about Infrastructure and real estate and you are treated to the following tid bits:
    • Implement full cost pricing for water and wastewater services.
    • Eliminate the Ontario Clean Energy Benefit as quickly as possible.
    • etc., etc., etc.,

As can be read, this is a broad axe cutting across the board. The tactic is quite simple, scare the living hell out of everyone, so they all start fighting for their programs, and then implement modest cuts, in areas already known and look less nasty because of it.

The only wrinkle here is that Heir McGuinty does not have a majority, so he is going to need to find some accomplices for his little farce. Wonder who will walk across the floor to join in?

Anyone care to disagree?


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