Ontario Liberals' fate over budget hangs on NDP

Ontario's governing Liberals delivered a budget with few surprises on Thursday afternoon, though it was clear they paid close attention to the demands of the New Democrats whose support will be needed for it to pass.

Built around six key themes, the Liberals said their $127-billion budget was aimed at creating "a prosperous and fair Ontario," by fostering economic growth, protecting public services and staying on track to slay the provincial deficit within five years. Income taxes are unchanged this year.

Finance Minister Charles Sousa said the government listened to Ontarians when crafting the budget, which he said represents "a balanced approach" to the challenges the province faces.

"The principles of this budget come from the people, they have had a lot to say," Sousa said in prepared remarks that were delivered to the legislature on Thursday afternoon.

The minority Liberal government needs the support of at least one opposition party for the budget to pass. And since the Progressive Conservatives vowed to vote against it well before Thursday, the New Democrats have been left with the power to decide the fate of the government and its budget.

NDP Leader Andrea Horwath said it was clear the Liberals had been listening to her members, but her party will now consult with the public before deciding how to proceed. In particular, the New Democrats will be considering ways of ensuring the government will deliver what it has promised in its budget.

"We will be talking to Ontarians about how we can put guarantees in place so that people know that money is being spent prudently and responsibly," she said in a statement.

Hudak says Ontarians want 'new team'

Meanwhile, PC Leader Tim Hudak told reporters Thursday that the province needs a new plan and "a new team" in government, also saying that he doesn’t think there is much of a difference between the Liberals and the New Democrats at the moment.

"Nothing about a Liberal-NDP coalition is going to help solve these fundamental problems," said Hudak.

The situation unfolding in Ontario is not unlike what happened last year, when the Tories did not support the budget and the Liberals looked to the NDP for support. The differences this year include a new premier at the helm of a minority government that has fewer seats in the legislature.

While the NDP managed to get concessions from the Liberals last year, the party has been burned in the past when propping up a government.

Twenty-eight years ago, the New Democrats agreed to support the Liberals if they implemented some of their ideas. When an election came two years later, the Liberals won a majority government and the NDP lost seats.

Preview matches product

The New Democrats had spelled out what they were looking for from the Liberals, if they were to support the budget. In turn, the government telegraphed much of the major planks in the budget ahead of Thursday, giving both the public and the third party a broad preview of what they would be offering.

The government had already announced its intention to implement a $295-million youth jobs strategy, a level of investment that the Liberals say exceeds what the New Democrats had been seeking. The government believes its program will generate job opportunities for 30,000 young people in Ontario.

The Liberals had also announced their intent to drive down the cost of auto insurance for Ontarians, though the budget does not set a hard timeline for achieving this goal. The NDP had wanted premiums slashed 15 per cent by the end of this year.

Prior to the budget, the Liberals had also announced funding to help reduce wait times for home care, though the government did not offer a five-day guarantee as the NDP had asked.

Something the Liberals hadn’t announced before the budget was a new $200 monthly earnings exemption for Ontarians receiving social assistance. The government said this proposed change, which the NDP has been calling for, would help boost the incomes of 57,000 people in the province. Additionally, the budget proposes increasing the social assistance rate by one per cent.

The budget also addresses changes to the employer health tax. The Liberals propose exempting small employers from paying the tax on the first $450,000 of their payroll. The government also proposes eliminating that same exemption for companies with payrolls of more than $5 million, something the NDP had asked for.

Eliminating the deficit

The government says it believes the provincial deficit in 2012-13 will be $9.8 billion, a figure that Sousa had made public prior to Thursday. That exceeds the 2012 budget forecast by $5 billion.

"This is the fourth year in a row that Ontario has reported a lower deficit than forecast — the only government in Canada to achieve this level of success," Sousa said.

For the 2013-14 year, the deficit is projected to be $11.7 billion, which the government says is $1 billion lower than was previously projected.

Sousa said the government remains "absolutely committed" to eliminating the deficit by 2017-18 and afterward bringing the province’s debt-to-GDP ratio down to pre-recession levels.

To that end, the Liberals are keeping a close eye on government spending, which they say will grow by less than one per cent, on average, for each of the next five years.

Figures included in the budget suggest government spending on programs will essentially flatline from 2014-15 to 2017-18.

The government said that public-sector partners must work together "to control current and future compensation costs, including wages, benefits and pensions."