The big news from Ontario’s budget is old news. Taxes are going up.
This isn’t necessarily a bad thing. The proposed tax hikes for carbon-emitting products, such as gasoline and home heating fuel, are part of Ontario’s effort to combat global warming.
Premier Kathleen Wynne’s Liberal government doesn’t want to call these particular levies taxes. It refers to them instead as “proceeds.”
And to encourage reporters covering Thursday’s budget not to focus on these “proceeds,” the government announced them earlier in the week.
But Wynne’s decision to finally bite the bullet and set up a so-called cap-and-trade system for greenhouse gas emissions is one of the most important moves she has made since becoming premier.
According to budget documents, the government estimates it will charge greenhouse gas emitters (except those, such as cement producers, that it chooses to exempt) about $18 per tonne of carbon spewed into the atmosphere.
They in turn will pass the cost onto final consumers. The government reckons that this will mean, for instance, a gasoline price hike of 4.3 cents a litre. Natural gas for home heating is expected to rise by 3.3 cents a cubic metre.
With Ontario’s system now finally in place, Canada is on its way to establishing a national minimum price for carbon.
Ontario’s scheme is hardly ambitious. British Columbia charges a carbon price of $30 per tonne. Alberta is planning to charge $20.
Nor will Ontario’s actions ensure Canada’s ability to meet the exceedingly modest climate-change targets it set for itself in Paris last year.
But it is a start.
One problem with Ontario’s plan is that it is not clear how the money raised from cap-and-trade will be spent.
Technically, the $2.4 billion raised over the next two years is to be earmarked for green projects that reduce carbon emissions. But the opposition Progressive Conservatives are suspicious — and rightly so.
Governments have a bad record when it comes to handling funds in supposedly dedicated accounts. In Ottawa, both Liberal and Conservative government have used the Employment Insurance fund to cover off shortfalls in general revenue.
The Ontario Liberals say they would never do that. But given their record of throwing money at dubious projects — such as the quasi-private air ambulance service ORNGE — the Liberals do not always inspire confidence.
Still, the decision to effectively levy a tax on carbon is a necessary step if climate change is to be curbed. It is one of the few ways to reduce greenhouse gas emissions.
The rest of Thursday’s budget focused on targeted austerity.
In order to meet its self-imposed deadline of balancing the budget by 2018, the government is determined to keep spending growth down.
To that end, it plans to rejig the Ontario Drug Benefit program in a way that hikes co-payments and deductibles for seniors earning more than $19,300, while giving a break to those who earn less.
It plans to keep health spending growth to 1.8 per cent a year, a promise that will have implications for patients, hospitals and doctors.
It plans to keep education spending growth to 1.2 per cent a year.
The centrepiece of Thursday’s presentation was a scheme that would reform the system of post-secondary grants, loans and tax breaks in order to direct more money to those from modest-income families.
But according to Finance Minister Charles Sousa, this new set-up would cost the government no extra money.
The government also said — again — that it is willing to cancel its proposed Ontario Retirement Pension Plan if Ottawa and the other provinces can agree to a national scheme able to accomplish the same ends.
Queen’s Park has given itself until 2018 to make a final decision.
And it quietly eliminated a few tax breaks while raising levies on beer and cigarettes.
But the real news is that Ontario has —after much hemming and hawing — taken aim again at climate change.
It may not be doing enough. It is doing something.