Any government’s first budget is intended to blaze a trail for the remainder of its mandate, and the first PC budget in 15 years did just that.
Finance Minister Vic Fedeli set out the path to a balanced budget that is reasonable and designed to fulfill many of the government’s promises early in its mandate. In seeking to position themselves for success, stakeholders must find a way to align their objectives with the fiscal and policy path set out.
The Fiscal Realities Set In
Upon election, the Ford government quickly laid out the significant fiscal challenges the province faces. Today the government outlined their path to fiscal balance over the next five years, with a modest surplus expected by 2023-24. Always eager to demonstrate progress, the government highlighted its ongoing drive for efficiencies, which has resulted in a reduction of the deficit from $15 billion at the start of its mandate to $10.3 billion in 2019-20.
There’s no question the government has set a challenging timeline – Minister Fedeli has been clear that the province’s commitment to restoring fiscal balance “will require everyone to make sacrifices — without exception.” The government’s financial recovery plan shows that spending in several key sectors – including Education, Post-Secondary Education, Children’s and Social Services, and Justice – will either hold relatively stable or decline slightly over the next five years.
This not only hints of battles to come – for instance, labour agreements and holding the line on funding for important partners – it also suggests a fundamental question for stakeholders outside of many key sectors who are hoping to receive government funding. If the government is willing to take on these politically sensitive funding commitments in their path to a balanced budget, is your request politically more important than the core services Ontario families rely on?
Transformation and Modernization
Efficiencies can also be expected to be aggressively searched for – and found – in what the Ford government has labelled as “transformation” or “modernization.” As the line-by-line budget review conducted in the fall indicated, this government has positioned itself to make the case it is seeking to do things differently and more efficiently, while tying funding to outcomes.
Every politician wants to leave a legacy that outlasts their government, and in that spirit the province has rolled out several noteworthy changes in advance of the budget, including an ambitious transit plan, health system reform, a centralized procurement initiative, employment and social services reform, and a sweeping review of public sector compensation.
While challenging given some of the government’s spending and revenue initiatives, the timeline for the return to balance may also be fluid depending on economic and fiscal impacts over the next five years.
Currently, the government has projected the budget will be balanced after the next election, but they may be taking a page out of former Liberal Prime Minister Paul Martin’s book of “under promise, over deliver.” If the Ford government can accomplish a balanced budget earlier than expected, this will be a huge victory and evidence of managerial exceptionalism. If they don’t meet the target, they have set expectations adequately.
“We are putting the people first”
While the budget addresses Ontario’s fiscal situation head-on, it also maintains much of the Ford government’s “For the People” brand that helped them get elected.
To blunt the sharp edge of changes to come, commitments such as no new taxes, a new Ontario Childcare Access and Relief from Expenses (CARE) tax credit, $90 million to establish a new dental program for seniors, and the largest transit commitment in recent history were sprinkled throughout the budget, many of which were rolled out in the days leading up to the budget.
Similarly, populist initiatives such as legalized tailgating and on-going changes to alcohol retailing personify the Ford Nation brand that brought may new voters into the Ontario PC fold in the last election – less nanny state and more individual freedom. These items and others have helped the government successfully position this as a moderate budget.
It should also be noted that a large part of the budget document focuses on “greatest hits” i.e. announcements already made by the Ford government, some of which are small in dollar value.
The reasoning is two-fold: first, to remind voters and stakeholders of the progress they have made to date, and second, re-announce spending in a time of fiscal restraint.
All in all, the government claims its savings will result in a projected $26 billion in various relief measures to Ontario families. This strategy was also deployed in the Fall Economic Statement, which saw $2.7 billion of the $3.2 billion in savings repurposed into tax relief measures for Ontarians.
Opposition reaction: ‘Cuts, cuts, and more cuts’
For the New Democratic Party (NDP), the devil is in the details. NDP Leader Andrea Horwath accused Premier Ford of hurting the people his government is supposed to represent – the province’s most vulnerable, students, and those living in rural and northern Ontario.
The Liberals portrayed the Ford government as the same as the Mike Harris Tories in their attitude towards public services. For the last few days leading up to budget day, they have been using the phrase (amplified on social media) of “Ford Cuts Hurt.” In addition, they are alleging that the PCs overstated the size of the deficit in order to make it easier to show progress bringing spending in line with revenues.
The search for savings continues
While Budget 2019 sets out the trail, there is still a lot of work ahead. Over the next three years the government will continue to explore all avenues to drive efficiencies, deliver costs savings and modernize government services. It is clear that every program, every transfer, every cent of government spending will continue to be reviewed with a critical lens.
In the end, this budget is meant to provide the guideposts in a journey over the rest of the government’s mandate. The Ford government has hinted at many of the initiatives that will come in the future, but the details are still to be fleshed out.
Reading the tea leaves, and positioning within the government’s goal posts, will be critical for stakeholders over the coming months and years.