Ontario Budget 2013: Minority Liberals Turn Left With $127.6 Billion Budget

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In a last-ditch bid to stay alive and avoid an election, Ontario's minority Liberals revealed a $127.6-billion budget Thursday awash in NDP orange along with the red ink. (CP)
In a last-ditch bid to stay alive and avoid an election, Ontario's minority Liberals revealed a $127.6-billion budget Thursday awash in NDP orange along with the red ink. (CP)

TORONTO - In a last-ditch bid to stay alive and avoid an election, Ontario's minority Liberals revealed a $127.6-billion budget Thursday awash in NDP orange along with the red ink.

Ticking off every demand the New Democrats put on their long list — from giving motorists a break on their insurance to delaying and eliminating some corporate tax breaks — the Liberals have thrown down the gauntlet and put the party that holds the balance of power between a rock and a hard place.

The New Democrats have a choice: prop up a government hungry for their left-leaning supporters, or defeat the budget that they helped craft and force an election just 19 months after the last one.

NDP Leader Andrea Horwath said she'll consult the public before making a decision. The budget reflects most of her party's proposals, but it lacks a commitment to deliver, she said.

"Today, we are not asking for more," she said. "We're asking for it to be done right."

Even though they're spending $900 million over five years to satisfy the NDP, the cash-strapped Liberals are making right-leaning promises to limit spending growth to 1.8 per cent a year, rebalance the books in 2017-18 and have no new taxes.

The budget not only addresses all the NDP's priorities, it offers a "much more comprehensive and transformative plan" to help Ontario's economy grow, said rookie Finance Minister Charles Sousa.

"This budget more than satisfies their needs, but more importantly, it satisfies the needs of the public," he said.

"This is a budget that talks about how to create jobs, it's a budget that talks about how we can help people in their everyday lives, it's a budget that's going to enable us to reduce this deficit and have a plan to balance."

Ontario's nine million motorists get a crowd-pleasing pledge to reduce their auto insurance premiums by 15 per cent on average, but it's unclear when that will happen since they must pass the legislation first.

The Liberals are also promising to widen key sections of 400-series highways in Toronto and Ottawa and highway 11-17 in northern Ontario.

Commuters in the Greater Toronto and Hamilton area will have the option of using some high-occupancy vehicle lanes for a price even if they don't have enough passengers. New HOV lanes on highways 401, 404, 410 and 427 in the Greater Toronto Area are also in the works.

Small and rural municipalities will get a new $100-million fund for roads, bridges and other infrastructure, and those with public transit will see their two-cents-per-litre share of the provincial gas tax made permanent.

Larger companies aren't as lucky. The province is reviewing refundable tax credits, with the possibility of turning them into grants or discontinuing them altogether.

Sousa has also written to the federal government asking them to delay HST input tax credits that would have allowed companies with $10 million or more in sales to claim certain expenses such as meals, drinks and entertainment until 2018. The NDP wanted them cancelled.

The Liberals are also boosting the Ontario Securities Commission's watchdog powers and matching federal legislation to crack down on offshore tax cheats.

Companies with a payroll over $5 million won't be able to claim a health tax exemption on the first $400,000 any longer, which the NDP wanted. But the Liberals are going one better and promising to raise the threshold to $450,000 and index it to inflation — a win for smaller businesses.

The tax changes will help fight a $11.7-billion deficit the province is facing in the coming year, driving up the net debt to $272.8 billion.

That figure is expected to grow by $31 billion by 2015-16, handing the Progressive Conservatives ammunition in their assault on the Liberals, who've doubled the province's debt since they took office nine years ago.

The Tories claim the province is in a debt crisis, but that's not the case, said Helmut Pastrik, chief economist with Central 1 Credit Union.

"I think the debt-rating agencies will view this as more of a situation that won't cause them to downgrade or issue a negative outlook, I don't think," he said.

Every government in Canada except Ontario has seen its deficit stay the same or deteriorate in the fiscal year that ended March 31, said TD Economics. Ontario's shortfall is expected to come in at $9.8 billion, down from $11.9 projected last fall.

But that had a lot to do with one-time savings from reducing teachers' benefits and revenue windfalls due to tax assessment revisions, the bank said. It's unlikely to happen again this year.

There will be more help for low-income Ontarians — another NDP demand. The budget includes a one per cent increase for people on welfare and disability support, who will also be allowed to keep the first $200 of earnings each month before their benefits are reduced.

Many of the NDP-friendly measures were announced before the budget was unveiled, including $185 million to reduce wait times for seniors needing home care and $295 million to reduce youth unemployment — both exceeding the NDP's monetary demands.

The Opposition Tories had already vowed to vote against the budget before they read it. So the Liberals need the New Democrats onside to survive.

History has taught the NDP a few lessons about propping up the Liberals. The NDP supported them in 1985 on the condition that they implement some of the ideas. Two years later, the Liberals won by a landslide while the NDP lost seats.

The risk of having the governing party take credit for NDP ideas won't be the only concern Horwath will have to consider.

The Tories are challenging her to pull the plug on the Liberals for blowing at least $585 million to cancel two gas plants for political reasons.

"To me it looks like (the Liberals) spent $1 billion to cancel gas plants to try to save Liberal seats, and now they're going to spend $1 billion to try to buy NDP support," said Tory Leader Tim Hudak.

"Neither of those ideas is actually going to help Ontario move forward."

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