Ontario Finance Minister Greg Sorbara tabled a hard-hitting and "prudent" budget Tuesday, calling on Ontarians to shoulder much of the fiscal responsibility to get the province back on track by freezing spending in 15 ministries and re-establishing a health premium. In return, he promised massive investments in health and education and to balance the budget in four years' time.
Mr. Sorbara, bringing down the first budget by a Liberal finance minister in 14 years, said he was forced to break the government's promise not to raise taxes by re-instating a set of progressive health premiums because of the dire financial situation the Liberals found themselves in, following the reign of the Conservatives.
- See also:
- Health-care premiums will be indexed
- Campaign promise had to go, Grits say
- Educations gets $800-million boost
- Campbell: Four years to soothe angry voters
- Ibbitson: Will McGuinty make Martin pay?
The Finance Minister denied he was worried about breaking one of the party's key election promises. The choice, he said at an afternoon press conference, was to "preside over an unprecedented deterioration in public services." And running a government is about tough choices, the Finance Minister added. "It is the reality of the work we do."
Ontario Finance Minister Greg Sorbara delivered his first budget Tuesday on behalf of Premier Dalton McGuinty. (Brent Foster/CP)
"Our choice was to impose a health care levy...to invest in a transformation and allow us, over the next four years, to bring about a balanced budget."
As had been reported, Mr. Sorbara reintroduced a set of health premiums aimed at boosting the health care system, (an echo of the Fair Share Health Care Levy imposed by the Tories in 1995) although those earning incomes of up to $20,000 a year will be exempt. Including the health premiums, the government anticipates a total increase of $2.4-billion in spending for health programs in 2004-05. And on education, the province plans to increase school board funding by $2.1-billion by 2007-08.
As he had admitted a few months ago, Mr. Sorbara said Tuesday that the government could not in good faith deliver a balanced budget this year. The Liberals had campaigned on a promise to balance the budget but said they were thwarted by a $5.6-billion deficit left to them by the former Conservatives, as revealed by a review of the province's books shortly after the Grits took office.
"These deficits are not our legacy—but they are our responsibility," Mr. Sorbara said in his prepared budget speech. "And we are assuming our responsibility to be prudent managers of the public purse."
The Liberals forecast a much-reduced deficit of $2.2-billion for 2004-05—down from a projected $6.1-billion for that year and a $6.2-billion current (2003-04) deficit.
This year's deficit had been predicted to go as high as $8-billion.
The government was able to project the $2.2-billion deficit using a one-time $3.9-billion revenue gain "related to the projected elimination of the liability for non-utility generator power purchase agreements"—thus based on the government's proposed reform of the electricity sector and offloading the cost of electricity onto the consumer.
Mr. Sorbara said the government plans to further reduce the deficit to $2.1-billion in 2005-06 and will continue to bring it down it until the budget is balanced, anticipated in 2007-08.
In Tuesday's budget, titled, A Plan for Change, the Liberal government clearly aims to revamp the health and education systems slashed by the former Conservatives while promising more accountability for government.
"Our plan is clear—it is to make Ontario a leader in economic growth, vital public services and quality of life. That plan calls for a responsible mix of investment, revenue generation, cost-cutting and economic growth," the Finance Minister said in the budget speech.
The Liberals also took aim at the former Tories' Balanced Budget Act, which requires the government to achieve a balanced budget or face financial penalties for its ministers.
"The government believes that unbalanced budgets are not sustainable, but also understands that forcing balance at the expense of all other considerations is neither responsible nor consistent with long-term sustainability," the budget reads.
Thus, a new act, the Fiscal Transparency and Accountability Act, will be introduced to allow governments to bring in a budget with a short-term deficit with the understanding that it must also release a recovery plan to the public.
"Everyone will know what's going on," Mr. Sorbara said.
Opposition Tory Leader Ernie Eves said it was time for the Liberals to stop blaming the previous administration for their financial woes.
"This government spins its wheels for seven months and says 'Woe is me. I can't really make this work,'" Mr. Eves said at a Tuesday afternoon press conference, flanked by a sign advertising the Tories' "Fliberal.ca" website. He said they could have begun to deal with the deficit immediately once the review of the finances was completed.
