Ontario has a spending problem, not a revenue problem

Austerity

The recent Ontario government’s Fall Economic Statement paints a picture of a government scraping to make ends meet and a crumbling fiscal house.

The picture is not pretty.  Revenues are down by over $500 million this year.

However, this government has never had a revenue problem – think back on 11 years of tax increases, including the health tax, which was the largest income tax hike in the history of Ontario, and the HST.  In my view all the buzz about a revenue shortfall is designed to set the stage for another onslaught of revenue generating tax hikes – something that was never promised in last spring’s election.

To correct its economic woes, Ontario needs to cut wasteful spending.  The Ontario Chamber of Commerce has predicted an annual $4 billion cut in spending is necessary in order to reach a balanced budget by 2017-18.

Business and industry require lower taxes to locate in Ontario – along with less red tape and reasonable electricity costs.  The last thing needed is the planned Ontario Retirement Pension Plan which will result in less dollars for businesses and their employees.

On the revenue side, government is looking for every way it can to squeeze more money out of residents and business.  Have you noticed the increase when you renew your vehicle license plate every year or the proposal to end free seniors’ resident fishing licenses?  These are two examples where Ontarians are feeling the squeeze.

The Fall Economic Statement didn’t expand on asset sales, but there is a line that says “the government will consider other tools, as necessary, to balance the budget by 2017-18”.  This doesn’t preclude future actions.  Selling assets to balance the budget is akin to selling your house to pay the credit card bill.

On the expense side, consider that the third largest expense in the Ontario budget is paying interest on the debt.  That debt has doubled over 10 years and is more than the debt of all other provinces combined.

And remember the scandals?  The billions of dollars wasted on the gas plant, Ornge Air Ambulance, E-health are all becoming apparent on the province’s balance sheet.  The end result is more taxes and less service for all of us – that’s something the government didn’t deny was a possibility if balancing the budget wasn’t on target.

The government’s claim that cuts in transfer payments are responsible for the shortfall is just more finger pointing and blame shifting.  Since 2006, when the Conservatives took power federally, Ontario has received an additional $8.27 billion in transfer payments.

Let’s also consider the bang we are not getting for the buck.  The increased spending has not resulted in better health care.  In fact, the president of the Ontario Nurses Association said the province has laid off 1,600 nurses in the past few years.  Wait times have increased and hospitals are reporting deficits.

And the situation could get worse if Ontario moves to subsidized daycare similar to Quebec’s.  Not only will this push taxes up for everyone, but the fallout could be seen through an even less favourable business environment.

Sadly, young people are catching on.  A recent Fraser Institute report ‘Go West, Young Adults’ confirms people are leaving Ontario in droves to move west for a full-time job and middle-class salary.

 

Toby Barrett is a Progressive Conservative member of the Legislative Assembly of Ontario representing the district of Haldimand—Norfolk.  Follow Toby Barrett on twitter: @TobyBarrettMPP

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