Andrea Horwath might have to defeat her dream...
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May 01, 2014  |  Vote 0    0

Andrea Horwath might have to defeat her dream budget: Cohn

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Pity poor Andrea Horwath. How do you defeat the budget of your dreams, a document any NDP leader in their right (or left) mind would support in a heartbeat?

Tax the rich — the top 2 per cent? Check.

Boost wages for poorly paid workers? Check.

Boost welfare rates and child benefits? Check and check.

Create a new public pension for workers lacking a workplace plan? Check.

Allocate billions for transit to help commuters getting to work? Check.

Hit up big corporations for more money? Check (albeit a small one).

Boost job-creation funding for youth and other workers? Check and check.

Perhaps that’s why Horwath was a no-show on budget day, declaring a day of radio silence so she could sleep on it. The NDP leader took an unprecedented rain check from Thursday’s budget lockup, the place where political leaders traditionally pore over the document with aides before delivering their verdict to a breathless press.

Horwath begged off for a day, just as she refused Wynne’s invitations to sit down with her in the days before the budget (as other leaders did from the Progressive Conservatives and the Green Party). Instead, her press secretary was sent out with a one-paragraph statement announcing that Horwath “will NOT be holding a press conference today.”

On Friday, she is scheduled to tell Ontarians what the NDP thinks — or very likely ask Ontarians what they think, by setting up her annual toll-free number (No, it’s not 1-800-HORWATH).

Horwath is on the spot. She has the power to bring down Kathleen Wynne’s Liberal minority government, weighed down as it is by the baggage from Dalton McGuinty’s premiership.

But the only way to trigger fresh elections is to vote down this budget — a budget probably more progressive than any other since the NDP held power under Bob Rae two decades ago (a feat not likely to be repeated soon).

Holding the balance of power in this minority legislature, New Democrats have held their collective noses to let two previous Liberal budgets pass. This time, it may be the reverse — Horwath holding her nose as she turns thumbs down on a budget she secretly admires, a fiscal plan that most New Democrats would very much want to see enacted.

Opposition Leader Tim Hudak — who mocked Horwath’s absence Thursday and once again tried to goad her into triggering the election he wants — vowed that if his Tories form the next government they will ditch every one of those budgetary measures: Lowering taxes for the rich instead of raising them, cancelling the wage hikes for the working poor, and scrubbing the pension plan that Horwath herself once called for.

That’s politics. The Liberal budget is that most political of documents, a budget that by virtue of its timing also serves as a ready-made campaign platform — camera-ready and fully costed (as much as budgets ever are):

• This budget taxes the rich while sharing the wealth with welfare recipients, the working poor and kids in need. Instead of targeting those 1-per-centers, this budget targets the top 2 per cent of Ontario’s taxpayers — applying a higher tax rate to that portion of an individual’s income over $150,000. At the same time, the Liberals are raising welfare rates, boosting the Ontario Child Benefit, raising wages for child care workers and personal support workers in the health sector, and allocating $810 million more for developmental disabilities. And it allocates big money for job-creation.

• The budget is remarkably bold on pensions. At first glance, this is a big political gamble, because the opposition, small business, and the business press will pounce on this as a so-called “job-killing” payroll tax, or a way to pick people’s pockets. Naysayers will grouse that politicians who waste big money on cancelled gas plants can’t be trusted with the money. In fact, pension premiums aren’t taxes that go into the government’s coffers, they are personal savings that are held by an arm’s length pension trust for diversified long term investments that yield consistently high returns. The Ontario Pension Retirement Plan (OPRP) would mirror the tried and trusted Canada Pension Plan in most respects.

The main difference: The plan would NOT be mandatory for anyone with an existing workplace pension plan (comparable to the CPP). The purpose of this plan, and its singular appeal, is that it is targeted for two out of three employees who are not entitled to a workplace pension. It is also geared toward middle class Ontarians who face the largest gap in retirement income (self-employed and low-income workers would be exempt for now). And while the premiums may sound high at first, they are in fact much lower than what most people with workplace plans currently pay. The real question up for debate is this: Do Ontarians without a workplace pension wish to have one — and enjoy the benefits of seeing their contributions matched by their employer — knowing that their retirement savings are being prudently invested to yield high returns?

• The budget paves the way on transit despite huge political roadblocks. The government needs to raise more than $40 billion over the next 20 years to fund its Big Move transit construction for the GTHA, plus extra infrastructure improvements across Ontario. The new wealth tax will be allocated for this, as will a portion of existing gas taxes, which will be used to leverage additional borrowings. It’s a compromise plan that shied away from the tolls and higher gas taxes that would act as better price signals to discourage gridlock. But it’s a start, and it more or less plugs the revenue gap that many thought couldn’t be bridged.

• The budget pushes the envelope on the deficit (not normally a problem for the NDP), but lays the groundwork for growth as the economy picks up steam in 2014-15. The numbers more or less add up, even if the deficit projections are pushing the envelope, and the promise of a balanced budget within three years require a leap of fiscal faith. • The seesaw deficit, which has wavered wildly in recent years, edges up to $12.5 billion in this fiscal year (up from $11.3 billion in 2013-14), largely due to lower revenues in a weak economy and reduced federal transfers. Without spending restraint, the number would have been worst. The deficit is projected to magically dissolve by 2017-18, right on schedule. Even in this best-case scenario, Ontario’s total debt will jump to nearly $296 billion ($5 billion higher than forecast). Net debt as a percentage of GDP (Ontario’s total economic activity) will keep rising to a peak of 40.8 per cent next year. That’s a big deficit, and huge debt, which is why Ontario remains the biggest sub-national (provincial or state) government borrower in the world. But that’s not the kind of number that New Democrats worry about.

What are the New Democrats fussing about in this budget? Doubtless they would like to soak corporations more than the modest increases contained in this budget (forcing large, Canadian-owned corporations to stop using the lower small business rate on their first $500,000 of income — a measure that will raise about $50 million a year). Horwath has called for a “modest” increase in the corporate rate (she insists on calling it a “rollback” of previous higher rates), but the Liberals are refusing.

Will this budget rise or fall on the question of that corporate rate rising or being rolled back? We shall see.

What does the NDP want? We shall see Friday, when Horwath is back on the job.

Toronto Star

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