March 26, 2009

In Search of Harmony (2009 edition): Quick Glance at Ontario's Budget

The Ontario budget gets dropped today, and without any type of fanfare or surprise McGuinty does the proverbial 'good policy, bad politics' thing, for the second time.

We can say whatever we want about the provincial budget. It couldn't have been any worse than what the federal government put out - lot's of money for a whole lot of nothing, so far. With the Ontario budget there seems to be some serious targeted spending in the areas of social housing, hospitals and schools. These are all good things. Cutting taxes for 93% of all Ontarians is also a good thing. As is the acceleration of the Ontario Child Benefit.

Once again, I'm extremely disappointed in the lack of true forward thinking, as I was with the federal budget. The Ontario budget doesn't seem to do anything for the environment, greening of public or private infrastructure, or research and development. Where is the direct assistance targeted at companies such as ZENN? That's where the future truly lies and that's where the money should be aimed at; companies that are thinking ahead.

The big ticket item was the harmonization of the Ontario sales tax and the federal GST. To be honest, I'm still not sold on this being necessary. Sure it will save the private sector some paperwork and some money. But at what cost?

About 18 months ago, I wrote about this very issue when Derek DeCloet wrote in favour of the idea. At the time I expressed skepticism based on how it would affect consumers. Granted, McGuinty and Duncan were able to swing a deal to get many items exempted still such as children's clothing, books, etc. Though as far as I can tell many things are still going to receive a tax increase including some medical and educational services such as chiropractic services and tutoring (which for many struggling students is necessary).

Harmonizing the taxes will also eliminate the exemption of food purchases under $4. It may not seem like much but many food service businesses (from the ma-and-pa shops to the McDonald's and Tim Hortons) take advantage of that to feed the masses in fast and affordable ways. It will have an impact, especially on the ma-and-pa shops, as they are all looking for ways to cover their growing staffing costs due to the incremental increases in the minimum wage at a time when sales and profits are down.

In 2007 I questioned if the overall benefit to businesses outweighed the costs to the public. I'm still questioning whether or not the benefits are enough.

I'll give credit where it's due and that's to Ontario and the feds for compromising on some exemptions. That was one of my biggest criticism back then and it has been partially dealt with here. I don't like the lack of overall control the province has given up considering Ottawa, under the federal Conservatives, has been less than fair or kind to Ontario when it comes to economic issues. But given McGuinty and crew knows those battles the best, if they are willing to do this, some understanding must have been reached.

The deficits that Ontario predicts to incur are forgivable as they pale in comparison to what the federal government is going to rack up by the end of it. And with giant companies drastically cutting workforces and with others closing outright government revenues are obviously going to be much less. As long as the deficit spending is done with accountability and effectively, without the gimmicks or partisanship (see the federal Conservatives), the Ontario Liberals may survive another episode of 'good but bad'.


Mike said...

You make some good points but I take issue with your point about there being no investments in the environment.

The newly tabled Green Energy Act places a huge focus on investing where the money is. See the website here. It's been praised by many environmental groups, in contrast to anything the federal government has done.

And the Ontario Budget supplements that with further investments. See here (specifically the section on "Growing the Green Economy").

Kyle said...


I understand your point. However, as far as I know (and I could be wrong), the green economic policies and the green energy act, etc. maybe new but they aren't new ideas from this government. These are policies that were proposed long before the economic downturn, were develop separately from this stimulus budget and intentions were of its own. Maybe I should have been more clear, but my disappointment comes from the lack of direct action to take advantage of cheaper labour and infrastructure costs and pushing a green agenda much more aggressively.

In a time of recession/depression, there should be a reboot of economic thinking. It should no longer be about the past, because the past ultimately failed. It should be about how to go forward and think ahead and in the long term.

The GEA is great, the green economy proposals are as well. There should have been greater attention to acceleration and expansion in Ontario's stimulus budget.

Quotes from people smarter than me...

"If a free society cannot help the many who are poor, it cannot save the few who are rich" ~ JFK

"Our lives begin to end the day we become silent about things that matter. " ~ Martin Luther King Jr.

"Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety. " ~ Benjamin Franklin

"First it is necessary to stand on your own two feet. But the minute a man finds himself in that position, the next thing he should do is reach out his arms. " ~ Kristin Hunter

"When you're a mayor and you have a problem you blame the provincial government. If you are provincial government and you have a problem you blame the federal government. We don't blame the Queen any more, so once in a while we might blame the Americans." ~ Jean Chretien

"Which is ideology? Which not? You shall know them by their assertion of truth, their contempt for considered reflection, and their fear of debate." ~ John Ralston Saul

"It is undoubtedly easier to believe in absolutes, follow blindly, mouth received wisdom. But that is self-betrayal." ~ John Ralston Saul

"Everybody dies, Tracey. Someone's carrying a bullet for you right now, doesn't even know it. The trick is to die of old age before it finds you." ~ Cpt. Malcolm Reynolds (Firefly, Episode 12)