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Ontario Desperately Needs A Realistic Plan To Curb Spending

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Ontario Premier Kathleen Wynne, who defended the Liberal government's decision to introduce a cap-and-trade program, shown at Evergreen Brickworks in Toronto on June 8, 2016. (Photo: Mark Blinch/CP)

Every winter, the Ontario Standing Committee on Finance invites groups to make submissions about what they would like to see in the spring budget. Every year, the Canadian Taxpayers Federation does what no other group in Ontario does: they ask the government to spend less money, not more.

With the government up against their ninth consecutive deficit, the message of restraint is one that they desperately need to hear. The government will add $64 billion to the debt over the next five years, and they continue to waste nearly a billion dollars every month on interest.

There are five specific areas that the government should focus on so that Ontario once again becomes a place that offers a bright future for everyone.

We must pursue the path that saves Ontario consumers the most money.

First, the government needs to pursue sensible changes to the electricity sector. Current hydro rates are unsustainable. Media coverage over the past year has been filled with tragic stories of Ontarians faced with hydro bills that they simply can't continue to pay, and over which they've lost all control.

To help reduce rates, the government needs to examine contracts for new electricity generation that were recently signed, but which have not yet begun construction. Even though we are producing so much electricity we are paying to get rid of it, in 2016 the government still awarded new wind power contracts that will cost consumers $65 million annually, and $1.3 billion over 20 years. The government also concluded a new procurement through FIT 5.0 -- the same kind of small-scale generation that has driven rates up across the province.

power line ontario
Power lines against blue sky, Ontario, Canada. (Photo: Oleksiy Maksymenko via Getty Images)

The government needs to review these contracts and assess whether the cost of cancellation will be less than the cost of going ahead. We must pursue the path that saves Ontario consumers the most money.

The government should also end the $400 million each year being spent on conservation programs. In large part because of the high cost of electricity, average household consumption is now 25 per cent less than a decade ago.

In fact, consumption has dropped so much that the Ontario Energy Board in April actually raised rates because of reduced consumption. Conservation program spending is good money after bad, and ending it would save $2 billion over five years.

This is a cost that families cannot bear.

The second thing the Ontario government should do in their spring budget is end the cap and trade carbon tax.

Although the government has claimed that cap and trade "will not make your electricity more expensive," the truth is that it will. The auditor general found that cap and trade is expected to hike electricity prices by 25 per cent for households. This is a cost that families cannot bear.

And that's just the increased cost of electricity. Cap and trade will also raise the cost of keeping your family warm in the winter by adding to the cost of natural gas, and it will make your commute to work more expensive by adding to the cost of gasoline.

The tax will also drive business out of the province. Cap and trade will cost small manufacturers $136,000 in the first year, and costs will escalate quickly. By 2030, the tax will cost each large participant at least $2 million.

Cap and trade will send billions out of Ontario -- by 2030, $2.2 billion of Ontario money will be sent to Quebec and California.

And for what? So the government can claim a greenhouse gas emission reduction target was met?

This creates a situation rife with opportunity for fraud.

Most of that target will not even be achieved by emission reductions that occur within Ontario. The auditor general found that only 20 per cent of the target would be achieved by Ontario reductions, and the rest would be achieved by reductions in California and Quebec. Yet, the government plans on taking credit for them.

And that's if the reductions actually occur. The current system could allow for reductions to be claimed by multiple jurisdictions, potentially tripling the amount of reduction being claimed on paper. This creates a situation rife with opportunity for fraud.

That's not the only example of a lack of transparency with cap and trade. The Ontario government will not list the carbon tax as a separate line item on natural gas bills, and will apply HST on top of the carbon tax. This is unique to Ontario, as British Columbia discloses the cost of the tax and also rebates the HST.

Third, the government needs to increase transparency and accountability in other areas, including by reversing their plans to provide a taxpayer subsidy to political parties. Asking people in this province who can barely make ends meet to pay for political attack ads is not just wasteful, it's insulting and unethical.

Accountability could also be improved by restoring the auditor general's power to review government advertising for partisan content. Since that power was removed, the amount the government has spent on ads has more than doubled, and there are numerous examples of inappropriate and partisan ads being run on the taxpayer dime.

At a time when the Ontario families are tightening their belts, the government is bloating.

Fourth, the government needs to reduce spending, especially program spending and corporate welfare, and reign in government employee wages. A recent study by the Fraser Institute found that government employees are earning an 11 per cent wage premium over their private-sector counterparts. On top of this, government managers just received massive raises, some as high as 35 per cent on top of their already six-figure salaries. At a time when the Ontario families are tightening their belts, the government is bloating.

Finally, the government must focus on debt reduction, and develop a realistic plan for balancing the budget that is long term and sustainable, and does not rely on the one-time sale of assets.

This was the message delivered to Finance Committee by the Canadian Taxpayers Federation. It is a message that is unfortunately rare, but one we hope -- for the sake of the future of this province -- that the government heeds.

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