Ontario Premier Doug Ford’s PC government missed a real political opportunity when it delivered its mini-budget on Wednesday. It may have been the government’s last chance to do something substantial about affordability before the next election, widely expected to take place in the spring.
Instead, Ford settled for a couple of small things that will do little to help Ontarians struggling to cope with the high cost of living. That’s despite affordability polling as the top concern for Ontario voters for two years, before slipping just behind health care in the third quarter of this year.
The big-ticket affordability item in the mini-budget is a plan to send $200 to almost every adult and child in the province. The government leaked the idea two weeks ago, apparently hoping to get maximum mileage out of what it considers to be a good policy.
Credit them for doing something by allocating $3 billion to affordability, but the way the money will be spent diminishes its effectiveness. Both the rich and the poor will get the same amount. The rich don’t need the money and a one-time payment of $200 won’t help a low-income person in any meaningful way. Perhaps Ford’s real target is the middle-income couple with three children. They will get $1,000.
One can argue, as Ford does, that putting money back into taxpayers’ pockets is a good thing, and generally it is. The $200 rebate, as the government calls it, would make sense if there was a surplus, but that’s not the case.
Wednesday’s mini-budget shows the government still expects a $6.6-billion deficit this year, so the government is borrowing money to give it away, $200 at a time. Taxpayers will have to pay it back with interest down the line.
To explain the affordability of this sudden generosity, the government pointed to “higher-than-expected revenues as a result of the impact of inflation on provincial sales tax revenues.” The mini-budget does show that revenues are up, but it’s not because of sales taxes. They were expected to bring in $39.9 billion. Now the number is $40 billion, so not really a windfall. The real revenue gains are in personal income taxes, expected to be $4 billion higher than anticipated, and corporate income taxes, up $4.8 billion.
That’s the reason why projected deficit is down from the $9.8 billion estimated in the spring budget. There’s progress, at least.
The other affordability measure in the mini-budget was a familiar one. Earlier this week, Ford announced the fourth extension of a “temporary”, 5.7-cent-per-litre reduction in gas taxes. This is punier than his $200 handout. The government says the tax reduction will have saved Ontario households $380 on average over three years. In other words, just over $125 a year.
In all, it doesn’t give PC candidates a whole lot to talk about when voters ask them about affordability next spring. Maybe there are plans for a spring budget that will act as the PC platform and offer to do more, but that will be made up of promises, not actions. As it is, even the $200 cheques won’t come until next year.
Voters have the right to be skeptical about Ford’s tax promises. In 2018, he said he would reduce the middle income tax bracket by 20 per cent, but he hasn’t delivered. Ford also promised to make the gas-tax cut permanent, but instead has milked it for all its worth by calling it temporary and continually renewing it.
Ford’s weak response to the affordability issue creates an opportunity for the opposition parties, if they’re smart enough to exploit it. It won’t be difficult to offer a compelling list of alternative ways to spend $3 billion, since millionaires will also benefit from the $200 handout. That’s hard to defend, easy to attack and fits with the NDP and Liberal narrative about Ford caring only about the rich.
The opposition leaders were quick to say the $200 plan is a vote-buying scheme. That won’t disturb most voters. One might argue that government itself is a vote-buying scheme.
The important question for the PCs is whether the scheme will indeed buy votes. Liberal and NDP supporters typically favour more government spending on health, education or social services, not rebates to taxpayers. The paltry handout is not likely to appeal to PC supporters either. Many of them cling to the old-fashioned notion that government should tax modestly and spend wisely.
It’s time for some political party to grasp the fact that affordability has become an entrenched problem in Ontario. It’s not going away and it can’t be fixed by temporary or one-time measures. The real cure is a permanent reduction in income taxes or sales taxes, one that takes less money from people’s pockets in the first place.
National Post