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The Salon is ONW's weekly gathering place where three of Canada's brightest and most respected political strategists - John Capobianco, Marit Stiles and Bernie Farber - come together to analyze national issues affecting Ontario.

Finance Minister Charles Sousa presented his Fall Economic Statement this week, saying Ontario is going to be half a billion dollars short in revenue this year.  How, then, can the Wynne Liberals hope to balance the budget by 2017-18 as they promised?


Bernie Farber:

It's a hopeful financial statement with significant progress since the passage of the 2014 Budget just four short months ago.

The government is clearly committed to balancing the budget by 2017-18 and will do so in a way that is both fiscally responsible and fair.

Concentrating on building modern infrastructure and transportation networks and creating a supportive and dynamic business climate is part of the plan going forward. Looks good to me.


John Capobianco:

It is going to get interesting here in Ontario with regards to how this Liberal government will deal with its finances while keeping an eye on the economy. Minister Sousa's fiscal update this week had some harsh realities, including government revenues slipping more than half a billion dollars from what was forecast in the budget.

On top of that, economic growth is projected at just 1.9 percent for 2014 and about 2.4 per cent a year for 2015-2017, which is also below the earlier budget projections.

These are significant miscalculations, which pose serious challenges for Minister Sousa and the Premier. They will be forced to keep their promise of no new tax increases, which means looking at other means of cutting costs or creating revenue.

This is the balancing act that will define this government and will determine the level of confidence businesses, unions, taxpayers and credit agencies will have moving forward.


Marit Stiles:

So the Ontario government finds itself with revenues slipping, slow growth and a whole heap of trouble on the horizon. There are spending promises on the table from the spring election.

The dollars to meet those commitments are going to come from cuts to other programs and services.


Bernie Farber:

John and Marit are quite right, however by investing in people skills and talents, building a stronger infrastructure and investing in transportation networks, the hope is that this will help grow the economy, protect revenue and create jobs.

By maximizing the value of provincial assets, hopefully it can provide the necessary resources to invest in new transit and transportation infrastructure to help expand the economy, improve competitiveness and productivity, and create jobs.  Doing so will fire the engines for all round growth.

In April 2014, the government appointed the Premier’s Advisory Council on Government Assets, led by former TD Bank Chair Ed Clark, to provide recommendations for maximizing the value of key provincial assets. This will be an important guide I think and very helpful.

We are on the right track. 

Finally, it's hoped the federal government will match the province's $1 billion investment in the Ring of Fire - all added investment for future needs.


John Capobianco:

You are an optimist, Bernie and I respect that, but saying that this government is on the right track is a bit hard to take, given the numbers and the projections we heard from Minister Sousa.

Now, I give the Minister full credit for suggesting that there won't be any new tax increases, but if you recall from the election campaign, the Liberals were viciously brutal to Tim Hudak and the PC's when Tim was suggesting cutting unnecessary services and realigning the bureaucracy.

This is exactly what the Finance Minister and Minister Deb Matthews are going to have to do, given the Minister's own words about "reviewing and transforming programs; managing compensation costs..."

This fiscal update comes on the same week as that of Alberta's new Premier, Jim Prentice's Speech from the Throne. In that Speech, Premier Prentice outlined his vision of ending entitlements, getting better value for resources and taking a lead on the environment.

Alberta is facing its own challenges with a thinning surplus pegged at only $1.4 billion in August, and lower oil prices - so it too, like Ontario, is going to have to find other methods of revenue generation while keeping costs down.


Marit Stiles:

Well, I guess there are many ways to spin this ... but at the end of the day this Economic Statement spells more cuts and the sale of more public assets.

Ontarians have to be asking themselves, where will the money come from if they won't raise taxes? What are these unspecified "other tools" that Mr. Sousa referred to using if they had to.

What's left to slash? I know I'm looking around at all the provincially funded services we rely on -- education, healthcare, long term care -- and wondering how we'll function with fewer desks, fewer staff, and fewer beds.

The Ontario Government really has a responsibility to be clear and transparent with people. I feel like there was a remarkable amount left unsaid, and I think that's the real story of the 'update'.

About The Salon

John Capobianco is a former CPC candidate and long-time party activist in both the federal and Ontario Conservative parties; Marit Stiles is a federal and Ontario NDP strategist; Bernie Farber is a former Ontario Liberal candidate and one of Canada's leading human rights experts.
Posted date : November 19, 2014

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