Ontario Fall Economic Statement Sets the Tone for Liberals’ Pre-Election Play

With less than seven months to go before the next provincial election, today the Ontario Finance Minister Charles Sousa presented the Fall Economic Statement (FES).  The Government’s essential posture with this Statement appears to be defensive, which might seem strange for a party mired in second place in the polls and led by a profoundly unpopular Premier.  However, the Governing Party is confident that its current policy mix is quite popular and cannot be materially improved upon; therefore, a policy document from a Finance Minister would not be the place for the Government to address its political challenges.  Rather, a defensive shoring up of existing bastions of support would seem to be the order of the day.

New Business Measures The FES pledged a number of business-friendly initiatives that are intended to benefit small business, and attract new investment from key industries to Ontario.

• Tax Breaks for Small Business: Small business tax rate reduced to 3.5% from 4.5% in 2018
• Youth Employment Incentives: $1000 credit for small businesses to hire workers between 15 and 29 years of age
• Apprenticeship Grants: Creating a Graduated Apprenticeship Grant that will provide more incentives to employers for apprenticeship completion
• Grow the Finance and IT industries: Create a “Regulatory Super Sandbox” to help bring new financial products and services to market more quickly and a FinTech Accelerator Office to attract new investment including the new Amazon HQ2

The political thrust of this policy appears to be to deny the front-running PCs a monopoly on wearing the mantle of protecting small businesses.  The Liberals may be pursuing a classic opposition strategy: “narrowing the target.”  The Liberal hope may be that by blurring differentiation around small business taxes, they can maintain focus on the contrast between their policies of economic “fairness” and the PC’s relative silence on such issues.

More so, many of the Liberals’ coveted millennial voters are of an entrepreneurial bent.  Whether they own a start-up with employees, or work in the gig economy as self-employed contractors, these voters are sensitive to a small business agenda.  Some of them are threatened by the Grits’ minimum wage and employment standards changes; others may be bruised from the federal Liberals’ proposed tax reforms.  The Wynne Liberals cannot afford any erosion amongst this demographic cohort, and have acted today in part to shore up that flank.

In response to the FES, Ontario PC Party Leader Patrick Brown made a specific commitment on the minimum wage as he begins to unveil more specifics of his party’s platform leading into a convention later this month. Under the current Liberal plan, after moving from $11.50 to $14 in 2018, the minimum wage would move to $15 in 2019. Today, Brown announced a PC government would slow this second move to increase by $0.25 a year from 2019 to 2022.

Liberals’ “Fairness and Opportunity” Plan

The Fall Economic Statement also trumpeted a number of social-progressive policies to appeal to voters on the left, primarily a new “Seniors’ Strategy” designed to gain the political support of Ontario’s growing aging population.

• Home Care Reform:6 million more home care hours in 2018, and creation of a new public home care agency that would compete with private and not-for-profit providers
• Long-Term Care: 30,000 new beds over 10 years
• Apartment Renovations: $15 million to upgrade seniors’ residences

As with the small business items indicated above, the Liberals’ purpose with these measures may be defensive.  The Grits enjoy strong support with segments of seniors; these measures seem intended to prevent any loss of support amongst this critical cohort.

At the broadest level, the FES was also intended to remind Ontarians of what’s at risk should voters elect the PC or NDP party in 2018.  This includes previous Liberal commitments to increase the minimum wage, investments in transit and infrastructure, expanded pharmacare, access to affordable child care, free tuition for low-income students, and investments in affordable housing.

With the Liberals rebounding into contention in pre-election polling, the PC and NDP parties will be on a mission in 2018 to prove to voters that they deserve better after a 14-year Liberal mandate