Ontario budget 2019: four things to watch

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Ontario’s first Progressive Conservative government in 15 years will table its budget for the 2019-20 fiscal year on Thursday, laying the groundwork for the next four years as the province faces a series of economic challenges.

Among other things, the budget is expected to tackle Ontario’s budget deficit and growing debt, propose child care subsidies, offer free dental care for low-income seniors and contain details about the province’s plans for the Greater Toronto Area’s transit systems.

A few smaller budget items have already been unveiled, including the legalization of tailgate parties and changes to Ontario’s licence plates.

On the fiscal front, Finance Minister Vic Fedeli is expected to address a large budget deficit. The Tories have signalled since the election that their first budget would show a “path to balance.” The province is also carrying a net debt of $346-billion and a 40.4 per cent debt-to-GDP ratio, and faces slowing economic growth projections.

“The first full budget under the new Ontario government is without a doubt the most hotly-anticipated of the 2019 season,” wrote Bank of Montreal economist Robert Kavcic in a recent research note. Mr. Kavcic added that this new government’s policies are likely to be a ”complete U-turn” compared to the previous Liberal regime, focusing on tax relief and pulling back on program spending.

With that said, here are four things to watch for in Ontario’s budget.

Budget balance

Treasury Board President Peter Bethlenfalvy on Wednesday said there will be a “reasonable, pragmatic, sustainable path to balance” in the budget.

The previous Liberal government announced its own “path to balance” plan in 2013, bringing the deficit down from $11.5-billion in 2013-14 to a deficit of $2.4-billion by 2016-17. They ultimately abandoned their plans to balance the budget in favour of enhanced program spending in their final year, leading to a 2018-19 deficit that was last pegged at $13.5-billion by RBC Economics, or 1.5 per cent of GDP (by comparison, the federal government’s deficit was $14.9-billion for the same period).

“What I can say that we are looking to cut is the level of spending [of] the previous Liberal government that we inherited, which was unsustainable,” Mr. Bethlenfalvy said. “I think we’re going to do it in a way that is modest and sustainable.”

Mr. Fedeli’s fall economic statement, published in November, didn’t offer any balance or debt projections, but did suggest Ontarians should expect spending restraint – that is, consolidation and cuts – and tax relief in the coming years. The government has already announced cuts or changes to teaching positions, social assistance, OHIP, the cancellation of funding for new university campuses and is reportedly exploring a cap on public sector wages, all of which will factor into the budget’s bottom line.

The balance won’t come immediately: Economists predict Mr. Fedeli will plot a multiyear course to bring the balance back to zero. Douglas Porter, BMO’s chief economist, suggested in a recent note that we should expect spending reductions “front-loaded into the first few budgets of the mandate,” while Sal Guatieri, also at BMO, expects the tax measures to be back-loaded to later years.

Child care

Child care subsidies are expected to play a large role in the budget. The Globe reported earlier this week that the government will be creating a tax credit similar to what the Tories proposed during last year’s campaign.

The Progressive Conservative platform promised a refundable credit of up to 75 per cent of expenses for children aged 0 to 15 years. The program would cover up to $6,750 until the age of six, and $3,750 for children aged six to 15. That program would work on a sliding scale: families earning less than $34,800 would qualify for the maximum amount, and the rebate would scale down to 26 per cent for families earning $155,095 or more. The platform estimated the program would cost $389-million a year.

A Canadian Centre for Policy Alternatives study published earlier this year found that Ontario’s cities ranked among the most expensive for child care across Canada. Toronto topped the list, with median child-care costs per infant of $1,685 a month.

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Dental care

The budget will also include free dental care for low-income seniors, according to a Canadian Press report. Seniors aged 65 and older earning less than $19,300 a year (or $32,300, for couples) would qualify, and the program is expected to cost close to $100-million a year.

The 2018 budget by the previous Liberal government promised up to 80 per cent dental coverage for people without insurance, but that was later shelved by the Progressive Conservatives.

According to a 2017 report by the Canadian Dental Association, a smaller percentage of people aged 61 and older reported visiting a dentist in 2012 compared to the national average.

Transit

The budget will earmark $28.5-billion for a transit plan for the Greater Toronto Area, including $10.9-billion for a new subway line.

The funding, announced Wednesday, comes as the City of Toronto and the province are in continuing negotiations regarding an “upload” of the management of Toronto’s strained subway system to the province. The new subway line, dubbed the “Ontario Line,” would connect Ontario Place to the Ontario Science Centre, and serve as a replacement for the currently-planned downtown relief line.

It’s likely the budget will also detail other transit investments. Last year, Transportation Minister Jeff Yurek noted he was considering alternatives to a proposed high-speed rail line between Toronto and Waterloo.

With a report from Laura Stone

Editor’s note: (April 10, 2019) An earlier version of this story said the previous Liberal government reduced the provincial budget deficit to $2.4-billion by 2014-15. In fact, the deficit was reduced to $2.4-billion by 2016-17.