Ontario’s budget woes won’t be helped by McGuinty budgeting

To the Editor:
Readers would not normally sift through the details of the provincial government budget. That’s a shame, because if they did, they’d discover why our province remains headed down a path of financial imprudence: our taxes are too high. They discourage investment at a time when we need all the investment we can get. Sadly this tax-and-spend habit was never debated much in the 2007 election, and the media gave it little attention.
During his first four-year term in office, Premier Dalton McGuinty had a couple of finance ministers, but the thrust was the same. Use tax dollars for all sorts of programmes, be they genuine needs or goofy whims. The sum total is that he ran a deficit budget in each of his first three years, and – what a surprise – a balanced budget with a good surplus for election year (2007).
The government’s recent economic statement for Ontario shows that the government’s budget is now set to have the smallest of surpluses (just barely in the black ink), despite healthy projected increases for its own revenues. And on top of that sad state of affairs, the provincial debt is projected to increase each year by $2-billion, even though 10 cents of every Ontario revenue dollar already goes towards paying the interest on that debt. The debt now stands at $142 billion, and by the time of the next election in 2011, will be about $150-billion, by Liberal projections. Imagine if those $9-billion could be pumped into health care and education each year.
Our debt could be retired in a disciplined way for the benefit of all Ontarians and all future governments. But that is not something that wins votes. So instead, McGuinty has committed $94.25 billion in new spending for the 2007/08 budget year, a substantial jump over the $88.12 billion of the year before (when he ran a $2.1 billion surplus). This seven per cent spending jump is not financially healthy.
The following year, Queen’s Park expects an economic slowdown, and the year after that, even more spending as things improve. Already, Ontario’s manufacturers are hurting, with 100,000 job losses over the past 12 months alone.
Government can’t afford to do everything for everyone. They must get used to doing things in a regular fashion (barring catastrophes, of course). Regular annual budget increases should be kept to the rate of inflation. Ministries will always be able to spend every penny they are given. Government must constrain spending to what is essential, plus a few promising initiatives which might improve and economize the way services are delivered. Only in this fashion can we reform our tax environment to generate jobs for Ontarians.
Reform’s draft budget for 2007/08 called for increases in line with inflation. Our 2.5 per cent increase is not only more reasonable, it is sustainable in the long-term, and allows ministries to plan for the future. We call for the bulk of the surplus (about $4 billion) to start paying off the province’s net debt. This two-pronged approach to budgeting will allow us to continue to deliver services without cutting out essential programmes. And it will allow us to grab the debt-tiger by the tail and wrestle it to the ground, lopping off $4 billion or so annually and then redirecting each year’s interest payment savings directly into health care, our biggest financial challenge.

Brad Harness
Leader, Reform Party of Ontario