Do people still care about balanced budgets? The Ontario Liberals sure seem to think so. “We did it!” Finance Minister Charles Sousa crowed, complete with exclamation point, in his prepared budget speech distributed to reporters in Thursday’s lockup.
For years, even as they defended their lavish spending, the Liberals talked of returning to balance as one might soothe a colicky baby. Lately, Premier Kathleen Wynne and her ministers have framed the $0 deficit as an “opportunity” for all manner of bigger and better things. Wading through the 294-page budget document unveiled Thursday, you would think eliminating 2016’s near-rounding-error $1.5 billion deficit would make all the difference in the world.
To wit: the headline announcement on Thursday was “free” prescription drugs for all Ontarians under 25, at a purported cost of $465 million a year. No small thing.
“Balancing … allows us to make … important new investments — investments that will have real meaningful impacts on people’s lives,” Sousa told reporters. “With a balanced budget,” the document itself observes, “more revenue can be spent on priorities like health care and education, and less on interest.”
That stands perfectly to reason, in principle. Only when you flip to the back of the book do you find interest on the province’s $300-billion-plus debt is projected to rise 12 per cent by 2019, to $12.6 billion that year. Net debt as a percentage of GDP will fall this year from 37.8 per cent to 37.5 per cent, which is splendid. But it was 27.9 per cent in 2008, and it’s not projected to get back there until 2029.
To Liberals, this is a feature, not a bug. As much as they boast of an “opportunity” to spend even more liberally, they boast of never having stopped.
“We had critical choices to make (when the recession hit),” Sousa said in the budget speech. “We could do what some suggested: cut expenses, cut vital programs and services that people depended on, to eliminate the deficit. (Or we) could take a more principled and thoughtful approach.”
They spent like soused seamen. From 2009 to 2017, program spending rose every year but one, by a total of 36 per cent. It is projected to rise another five per cent over the next two years. The Liberals are only promising two years of balanced budgets. The Financial Accountability Office projects it won’t last past 2018. And even this balanced budget is based on one-time revenues from the sale of government assets and on much-disputed accounting for pensions.
Still, Ontario taxed-and-spent its way to something within sight of a balanced budget — and whatever you think of the approach, there’s a good story in there for the Liberals to tell.
“In a world of slower economic growth, Ontario’s performance in the past three years — an average of growth rate of 2.6 per cent annually — is probably as good as it gets for a large, mature and diversified economy,” Robert Hogue, senior economist at RBC, wrote in his March outlook. Unemployment is at an eight-year ebb. The retail, manufacturing and residential constructor sectors are rebounding-to-booming.
The Liberals say that’s all thanks to them. And now, thanks to a budget surplus of, uh, $0, they can afford to do redouble their efforts: a “low-carbon economy,” business subsidies for everyone, from automakers to spinach packers, an ever-growing pot of infrastructure spending (now $190 billion over 13 years), a tax credit for elderly transit users, support for caregivers, and rent control.
Does any of this even matter, though? Do voters care?
All those relatively strong economic numbers haven’t convinced Ontarians that the province is on the right track. In July 2015, 49 per cent of respondents to a Mainstreet/Postmedia poll said they felt it “very important” for the “federal government to (deliver) a balanced budget.” A further 28 per cent said it was “moderately important,” 13 per cent “somewhat important” and just four per cent “not at all important.” Then Justin Trudeau came along promising deficits and ate everyone else’s lunch. Federal deficits are projected to last until kingdom come, give or take, and no one thinks the Liberals in serious danger in 2019.
Meanwhile Wynne is offering more or less the same kind of touchy-feely pitch as Trudeau, and no one will give her the time of day — or at least not now, with many months to go before the campaign platforms drop and the Liberals roll out the standard attacks. Most Ontarians don’t like cuts, it seems, and that’s pretty much all Wynne can pin her hopes on these days. But one suspects the gap between expenses and revenues, positive or negative, won’t much bearing on the outcome, one way or the other.