Apr 13, 2018
5 Takeaways from the 2018 Ontario Budget
You could be forgiven for mistaking the tabling of the budget with the official launch of the Liberals’ re-election campaign. This is the final budget before voters head to the polls on June 7th, and effectively serves as Kathleen Wynne’s platform.
Let’s take a step back and talk about how we got here. After fifteen years of Liberal government in Ontario, the province seems poised for change (see the results of the polling data Ihor released yesterday). Despite expanded pharmacare for children, free tuition, and a 25% hydro rate reduction, the Wynne Liberals continue to lag behind in the horse race, trailing the Ontario PC Party (led by Doug Ford) and not far ahead of the Ontario New Democratic Party (led by Andrea Horwath).
The last six months has also seen significant turnover on the Liberal front bench, with many lead cabinet ministers and Wynne confidants opting not to run for re-election. Wynne’s personal unpopularity is compounding the Liberals’ woes, where even in their stronghold of Toronto and among the all important millennial cohort, the party appears to be in a dead heat with their opponents.
It would be a mistake to count Wynne out – after all, everyone loves a comeback story. The Premier took a gamble with this budget that voters will put aside their less-than-chummy feelings about her in favour of more social programming. In a healthcare focused budget, Kathleen Wynne is hoping to come off as the Buckley’s Cold Medicine on Ontario politics. Voters may not like the taste, but it could work for curing the province’s ails.
So … what is the message from the budget and the narrative heading into June? Contrast. With Wynne, voters can anticipate more funding for healthcare, education and transit – as well as some tax relief, a surprise measure unveiled today that will speak to low and middle income voters. The Progressive Conservatives meanwhile have alluded to finding efficiencies and reducing provincial spending by 4% - which Liberals will argue puts both their promises and current programs at risk. The New Democrats are planning to take Wynne’s plan even farther, offering more services to more Ontarians (universal dental care is one example).
The budget - a proxy for the platform to come - makes it clear that the Liberals want nothing more than to have this be a two-horse race between them and Doug Ford telegraphing a “care vs. cuts” campaign message.
Will voters buy what the Liberals are selling? The answer depends entirely on what the ballot box question will be come June.
There’s little doubt that the Liberal childcare plan in particular may give young families pause before ruling them out. Meanwhile, students and young people have been given many gifts from Premier Wynne (including expanded free tuition and prescription medication). If they show up to vote as they did for Prime Minister Trudeau, the Liberals could come up with a surprise win.
Are people ready to trust Kathleen Wynne, and are they willing to pick up the tab of $8 billion?
But are people ready to trust Kathleen Wynne once again to deliver on these promises? And – are they willing to pick up the tab of $8 billion for them? Promised deficits worked for the Trudeau Liberals, but the Opposition will look to sow the seeds of doubt and play up public mistrust of Wynne and the Liberals over the next several weeks.
If the ballot box question is on policy, there’s an edge for the Liberals. But if the question in voters’ minds is change, that is what there will be on June 7th. Campaigns matter, and expect all politicos (not just those in Ontario) to be watching this one and taking notes.
What will parties do between now and June to shape the ballot box question? When will opinions crystallize? Are campaign ads working? These are some of the things that we will be looking at as a part of ONPulse and the focus of the premium services we are offering as part of the programme. So if this election matters to you, subscribe today.
In the meantime – here are the 5 key takeaways from the budget team at Summa Strategies.
A Spoonful of Funding Helps the Medicine Go Down
The doctor is in, and her name is Kathleen Wynne. Or that is what the Liberal government hopes you take away from their healthcare-focused budget. Voters have already gotten a taste of these measures over the past few weeks, including free prescription drugs for those 65 and older, over $820M in new funding for hospitals. and $2.1B in mental health funding. This brings the total to $17B over 4 years. Also included in the budget: A Senior’s Healthy Home Program for those 75 and over to help elderly Ontarians remain in their homes, longer. Budget 2018 also committed to create 30,000 new long-term care beds over the next 10 years. The Wynne government took a run at one of the central planks of the Ontario NDP’s proposed plan for universal dental care, by offering a new Ontario Drug and Dental Program that will reimburse 80% of eligible prescription drug and dental expenses annually. This increased healthcare funding comes after ongoing disputes with Ontario doctors over fees and contracts, and stories across the province detailing the rise of hallway medicine.
Won’t Somebody Think of the Children?!
On the eve of the budget, the government unveiled the feather in their fiscal policy cap - a promise to provide free, full-day, licensed childcare for children over two-and-a-half years-old until they enter junior kindergarten. The plan is expected to cost $2.2B, and won’t take effect until 2020; but it is an idea that’s been percolating for some time with the Wynne Liberals, who are looking to edge out the NDP on the left. While the NDP have released some policies, their stance on childcare for the upcoming campaign hasn’t yet been made public. The plan is expected to save those who use it $17,000 annually. And don’t forget, this is in addition to the OHIP+ program outlined for those under 25 who now have access to free prescription medication.
School of Thought
If you are experiencing some deja vu from previous announcements and budgets, you’re not alone. Free tuition is back, but more students are now eligible. 225,000 scholars will now be able to take advantage of this program based on the province’s own estimate. Ontario has also committed to making it easier to access financial aid (starting after the election), and will be encouraging students to go green by offering digital textbooks and resources through the free, online Ontario Open Textbooks Initiative. This plan is the government’s response to an NDP proposal that would turn all repayable student loans into non-repayable grants. Also in today’s budget: $132M over three years for modernized postsecondary programs to address labour market gaps, and $170M over that same period to provide more trades-related learning opportunities. The political math on this proposal is pretty clear. For the first time, millennials (i.e. those between 18-35) are the largest voter demographic in Canada and, as seen in the last federal election, they have the ability to move voting outcomes (if they show up).
If You Build It, They Will Come
“Keeping People Moving” was a top takeaway in our budget analysis last year, and the same is true of Budget 2018. On the heels of a nearly $9B federal-provincial transportation funding agreement and an announcement of expanded Go Train service, the Liberals are hoping commuters give the green light on their plans to pursue a regional rapid transit system (tripling the number of weekly trips by 2025). Outside of Toronto, transit projects in Ottawa, Waterloo and London will also benefit from provincial support (conveniently, target cities for the Liberals to hold in the June election). Infrastructure funding was also detailed in Budget 2018, with some key measures for vote-rich Northern Ontario, including an additional $85M for the Northern Ontario Heritage Fund Corporation over the next 3 years.
Perhaps the biggest contrast between Budget 2017 and 2018 is the return of a balance sheet that is in the red. A balanced budget - something the Liberals committed to do and met previously, has been replaced with a $6.7B deficit this year. This shouldn’t come as a surprise. Finance Minister Sousa was been conditioning the public for a return to deficit for the last several weeks. He said it was a deliberate choice to do so and there would be a plan to return to balance. Sousa kept his word on that. The province projects a return to balance by 2024-25. Getting there will rely on a projected 1.9 per cent average real GDP growth until 2021, and a greater focus on exports and business investment.
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