Ontario Health Coalition

 ANALYSIS

ONTARIO ALTERNATIVE BUDGET FACT SHEET:

Harris Government Budget 2001-2

Ontario Alternative Budget Working Group May 9, 2001

 

The wrong priorities at the wrong time

The tax cut fixation continues - at great cost to Ontarians

  • Tax cuts are yet again the priority for the Government in 2001-2.

  • By far the largest budget change item is $4.23 billion for tax cuts to be phased in over the next three years. More than half of the new tax cuts go for Corporate Income Tax and Capital Tax cuts

  • By the time the cuts in this budget are phased in, the revenue loss, in 2001 dollars, will be nearly $16 billion annually.

  • The Personal Income Tax cuts are trivial. As a result of the changes announced in this budget, most taxpayers will realize savings of less than the $200 they got in Ernie Eves' Budget 2000 one-time tax give-away.

    A risky fiscal plan
  • The Government's fiscal plan is razor thin. It projects a $100 million surplus - essentially zero. Although it has reduced its forecast for growth for 2001 from 2.8% to 2.2%, it is forecasting a major rebound for 2002 to 3.5%. The forecasts used by the Government continue to be relatively optimistic. If there were a great deal of flexibility in this budget, that would be less of a concern. But there is very little flexibility.

  • A further indication of the Government's budget high-wire act is that on a cash basis, the government ran a deficit of $4.6 billion in 2000-1 and will run a further deficit of $2.3 billion in 2001-2.

    Ignoring the real issues
  • The real story of this budget is the Government's absolute failure to address any of the pressing issues facing this province. Public infrastructure continues to deteriorate

  • With Ontario's physical infrastructure deteriorating rapidly, the Government is allocating less than $2 billion for capital spending in this budget. That's 0.4% of Ontario's GDP. Compare that with the 1.4% of GDP level at the beginning of the 1990s. This is the lowest capital budget in the last 15 years.

    The attack on the poor continues
  • The poorest citizens of this province have already had a cut in their purchasing power of more than 30% since Mike Harris was elected. Yet again, social assistance rates are unchanged in this budget.

    Education system chaos will deepen
  • The chaos in the school system will continue. The $13.85 billion in elementary and secondary education funding announced over the past few weeks represents a cut, in real per student terms, of $325 million this school year, compared with last year. In total, since Mike Harris was elected, total education funding has dropped by $2.4 billion on a real per student basis. That's a cut of more than $1,000 per student in "student focused funding".

  • The increase in funding for colleges and universities for 2001-2 is only $130 million, projected to grow to $293 million in 2003-4. This is less than half the $600 million that the university sector alone set out as a minimal requirement to deal with enrolment growth.

    The needs of cities are ignored
  • With homelessness at unacceptably high levels and growing, and with affordable housing on the decline, there isn't once cent for housing in this budget. In fact, the budget for the Ministry of Municipal Affairs and

    Housing will be cut by more than $600 million.
  • Ontario's major urban areas get the back of the Government's hand. The total amount in this year's budget for public transit is $30 million. Housing is being ignored. Further cuts in capital funding mean that local infrastructure will continue to crumble. In the Government's own priority areas ˆ less than meets the eye.

  • In health, the $1.2 billion by which the Government claims to be increasing health spending is almost entirely due to $1.05 billion in increased Federal Government funding. The Government's only response to Ontario's hospital funding crisis is to make deficits illegal, thereby guaranteeing service cuts.

  • Its increase in funding for the environment is a drop in the bucket compared with what is needed to restore safety and credibility to our sewage and water treatment systems. Funding increased by only $22 million. Capital spending actually went down by $3 million.

    From voodoo economics to doofus economics
  • The continuing sway of tax cut religion over the Ontario Government is the underlying story of this budget.

  • Ontario is heading towards corporate tax rates at half the rates in neighbouring states and top personal tax rates lower than comparable rates, despite the lack of any evidence that these cuts have any effect other than to reduce our ability to pay for public services.

  • The Government continues to claim, against the plain economic facts, that Ontario's economic performance is driven by Ontario's tax cuts, and not by the performance of the US economy. So strong is the religion that the Minister does not even try to explain the current economic downturn.

  • In sticking to its line on tax cuts, the Government is holding to a view of how Ontario's economy develops that is shared by no-one else.

  • Even on its own terms, the policy makes no sense. By starving public services like education, health and public infrastructure into a crumbling chaos, the Government is undermining Ontario's key competitive assets in the new knowledge-based economy.

    The Ontario Alternative Budget is a project of the Canadian Centre for Policy Alternatives.
    For further information, contact Ross McClellan, 416-443-7687; Hugh Mackenzie, 416-544-5970.


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