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Critics jump on Ontario surplus
Liberals post $298M windfall Not good enough
to scrap health tax
Aug. 25, 2006. 01:00 AM
ROB FERGUSON
QUEEN'S PARK BUREAU
Ontario's finances are finally out of the red, but Finance Minister Greg Sorbara says they're not rosy enough yet to scrap the controversial health tax of up to $900 per person.
New figures show the government posted a "modest" surplus of $298 million on its $84 billion budget in the fiscal year ended March 31. A deficit of up to $2.8 billion had been forecast just over a year ago.
The windfall is thanks to higher-than-expected tax revenues in a healthy economy, lower government expenses and accounting changes that if not in place would actually have left Ontario's finances in a small deficit.
"This says we're making real progress," said Sorbara, who is quarterbacking Liberal re-election efforts for the campaign scheduled for a year from now.
"For a finance minister to get to a surplus in a year that had some of its challenges, it's a great summer treat."
Opposition critics said the surprise surplus means the Liberals have been misleading citizens about government finances, given that warnings of a deficit for last year were being telegraphed at almost $1.4 billion as recently as the March budget.
The announcement of the surplus came as the Liberals are fighting to hold the riding of Parkdale-High Park in a Sept. 14 by-election following the resignation of popular education minister Gerard Kennedy to seek the federal Liberal leadership.
But before taxpayers and interest groups start sticking their hands out for cash, the finance minister warned he still expects a deficit this fiscal year before balancing the books for good in two years.
However, the books could be balanced in next spring's budget — the last before the election — if Sorbara decides to use up a $1 billion reserve fund.
"The message continues to be the same: We have to be prudent," Sorbara said.
While ministry officials said tax revenues continue to roll in at last year's torrid pace, Sorbara said the risk is that higher interest rates and a slowing U.S. economy, where Ontario sells most of its exports, could hurt the province financially. The high Canadian dollar and rising oil prices also threaten the province's fiscal plans, he warned.
That means the Liberals are not going to change their plan to leave the health premium, introduced in their first budget in 2004, in place until a scheduled review in 2009.
"I think we're going to stick to that," Sorbara told reporters. "I don't speculate on tax changes."
The tax proved a lightning rod for critics, given Premier Dalton McGuinty's pre-election promise that "I won't raise your taxes." Liberals said they had to break that pledge to keep their promise to improve health care and other public services.
Progressive Conservative MPP Tim Hudak (Erie-Lincoln) called on the McGuinty government to "give people a break by cutting the health tax." His party is promising to phase out the tax in its first mandate if elected Oct. 4, 2007.
"This government would make drunken sailors blush," Hudak said. "They have taken about $14 billion out of the pockets of working families, small businesses and seniors through higher taxes."
Sorbara suggested he's not afraid to defend the health premium in next year's election campaign because the more than $2 billion it raises annually has helped reduce waiting times for key medical treatments.
The government has also reduced class sizes in junior school grades, boosted funding for education and fixed a "financial mess" that included a $5.5 billion deficit inherited from the previous Conservative government, he added.
"I think that's going to be very popular."
The New Democrats questioned why Sorbara was crowing about a budget surplus that would actually have been a deficit if not for the new accounting method.
The government is now incorporating the financial results of hospitals, colleges and school boards — all of which receive significant provincial funding — into its own to give a more accurate picture of Ontario's finances.
"This is budget trickery from a government that has deliberately overestimated its spending and underestimated its revenue as a way of breaking its promises," said MPP Rosario Marchese (Trinity-Spadina), calling on Sorbara to put more money into daycare, social housing, autism treatment for children and keeping tuition fees down.
"Now they don't have an excuse any more."
Sorbara said some of the windfall $2.2 billion in tax revenues wasn't known until after the March budget because companies and individuals don't file tax returns until the spring.
The tally included personal income tax revenue that came in $1 billion over forecasts because of strong wage growth, while corporate tax revenue was $736 million more than expected.
At the same time, government expenses were $1.4 billion lower than expected when the March budget was tabled by Sorbara's predecessor, Dwight Duncan.
Still, the province's net debt has grown under the Liberals, from $138.5 billion when they took office in 2003 to $141.9 billion in the year ended March 31, according to government financial statements released in the March budget and yesterday.
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This has got to be a nasty one for the provincial government. Have a surplus and look good in Ontario, but bad to the rest of the country for demanding more fairness in equalization; or run deficits, look bad in Ontario but be able to make a better case on demanding more back from Ottawa.
Liberals post $298M windfall Not good enough
to scrap health tax
Aug. 25, 2006. 01:00 AM
ROB FERGUSON
QUEEN'S PARK BUREAU
Ontario's finances are finally out of the red, but Finance Minister Greg Sorbara says they're not rosy enough yet to scrap the controversial health tax of up to $900 per person.
New figures show the government posted a "modest" surplus of $298 million on its $84 billion budget in the fiscal year ended March 31. A deficit of up to $2.8 billion had been forecast just over a year ago.
The windfall is thanks to higher-than-expected tax revenues in a healthy economy, lower government expenses and accounting changes that if not in place would actually have left Ontario's finances in a small deficit.
"This says we're making real progress," said Sorbara, who is quarterbacking Liberal re-election efforts for the campaign scheduled for a year from now.
"For a finance minister to get to a surplus in a year that had some of its challenges, it's a great summer treat."
Opposition critics said the surprise surplus means the Liberals have been misleading citizens about government finances, given that warnings of a deficit for last year were being telegraphed at almost $1.4 billion as recently as the March budget.
The announcement of the surplus came as the Liberals are fighting to hold the riding of Parkdale-High Park in a Sept. 14 by-election following the resignation of popular education minister Gerard Kennedy to seek the federal Liberal leadership.
But before taxpayers and interest groups start sticking their hands out for cash, the finance minister warned he still expects a deficit this fiscal year before balancing the books for good in two years.
However, the books could be balanced in next spring's budget — the last before the election — if Sorbara decides to use up a $1 billion reserve fund.
"The message continues to be the same: We have to be prudent," Sorbara said.
While ministry officials said tax revenues continue to roll in at last year's torrid pace, Sorbara said the risk is that higher interest rates and a slowing U.S. economy, where Ontario sells most of its exports, could hurt the province financially. The high Canadian dollar and rising oil prices also threaten the province's fiscal plans, he warned.
That means the Liberals are not going to change their plan to leave the health premium, introduced in their first budget in 2004, in place until a scheduled review in 2009.
"I think we're going to stick to that," Sorbara told reporters. "I don't speculate on tax changes."
The tax proved a lightning rod for critics, given Premier Dalton McGuinty's pre-election promise that "I won't raise your taxes." Liberals said they had to break that pledge to keep their promise to improve health care and other public services.
Progressive Conservative MPP Tim Hudak (Erie-Lincoln) called on the McGuinty government to "give people a break by cutting the health tax." His party is promising to phase out the tax in its first mandate if elected Oct. 4, 2007.
"This government would make drunken sailors blush," Hudak said. "They have taken about $14 billion out of the pockets of working families, small businesses and seniors through higher taxes."
Sorbara suggested he's not afraid to defend the health premium in next year's election campaign because the more than $2 billion it raises annually has helped reduce waiting times for key medical treatments.
The government has also reduced class sizes in junior school grades, boosted funding for education and fixed a "financial mess" that included a $5.5 billion deficit inherited from the previous Conservative government, he added.
"I think that's going to be very popular."
The New Democrats questioned why Sorbara was crowing about a budget surplus that would actually have been a deficit if not for the new accounting method.
The government is now incorporating the financial results of hospitals, colleges and school boards — all of which receive significant provincial funding — into its own to give a more accurate picture of Ontario's finances.
"This is budget trickery from a government that has deliberately overestimated its spending and underestimated its revenue as a way of breaking its promises," said MPP Rosario Marchese (Trinity-Spadina), calling on Sorbara to put more money into daycare, social housing, autism treatment for children and keeping tuition fees down.
"Now they don't have an excuse any more."
Sorbara said some of the windfall $2.2 billion in tax revenues wasn't known until after the March budget because companies and individuals don't file tax returns until the spring.
The tally included personal income tax revenue that came in $1 billion over forecasts because of strong wage growth, while corporate tax revenue was $736 million more than expected.
At the same time, government expenses were $1.4 billion lower than expected when the March budget was tabled by Sorbara's predecessor, Dwight Duncan.
Still, the province's net debt has grown under the Liberals, from $138.5 billion when they took office in 2003 to $141.9 billion in the year ended March 31, according to government financial statements released in the March budget and yesterday.
----------------------------------------
This has got to be a nasty one for the provincial government. Have a surplus and look good in Ontario, but bad to the rest of the country for demanding more fairness in equalization; or run deficits, look bad in Ontario but be able to make a better case on demanding more back from Ottawa.