Ontario Budget: focus on debt & deficit makes a comeback

For more details

Ontario Budget Backgrounder and Highlights

Key areas of interest to small business

2011 Pre-budget presentation

To the Standing Committee on Finance and Economic Affairs

2011 Summary of recommendations

Entrepreneurs – Ontario’s Advantage

Of further interest:

• News Release: Ontario budget focuses on “protecting” public service, not growing the economy: CFIB
• Advisory: Ontario urged to embrace ‘Year of the Entrepreneur’ at pre-budget hearings

After generating some pre-budget momentum through government measures to stem the rising cost of regulations and minimum wage, Queen's Park shut the door to helping small firms with escalating payroll taxes. It is therefore frustrating for job creators to hear the Ontario government complain about high unemployment when it continues to increase WSIB premiums and champion higher mandatory CPP contributions. The one silver lining was the decision not to cave to opposition demands to roll back previously announced tax relief.

With public sector unions having ignored the government's last attempt to control spending through a voluntary pay freeze, Finance Minister Duncan announced the Commission on Broader Public Sector Reform to find cost-effective ways of delivering public services. While the task of meeting their own target to balance the budget by 2017-18 just got harder - 20 of 29 ministries saw an increase in spending - the government's latest attempt to rein in spending is a positive development. In fact, the commission's mandate is to explore ways of balancing the books through spending reductions, not through tax increases.

Here are other noteworthy budget highlights:

Deficit:

• The deficit for 2010/11 is projected to be $16.7 billion - $3 billion lower than forecast a year ago. The government plans to eliminate the deficit by 2017/18. CFIB recent spending report - Restoring Canada's Fiscal Balance - concluded that the only way Ontario could meet that target would be to freeze spending.

Debt:

• While the government is taking some measures to tackle the deficit, we are concerned about rising debt levels. Total debt is projected to be $236 billion in 2011 (up from $212 billion in 2010). Net debt is at $217 billion (from $193 billion in 2010). The government may have missed a golden opportunity by not tackling the debt sooner (while interest rates are low).

Pensions/Retirement Income:

• The budget reinforces the government's support for a "modest, phased-in, fully funded enhancement to the CPP", which is serious concern to CFIB members. Instead, our members support the creation of new innovative, low-cost retirement savings options. The government is committed to continue to work closely with the federal government and with other provinces and territories to design the implementation details of Pooled Registered Pension Plan (PRPP). CFIB remains very involved in the consultation process on the PRPP design and will continue lobbying both federal and provincial officials.
• We are also concerned about sizeable increases in the cost of maintaining the Ontario Teachers' Pension Plan. In addition to higher amounts (nearly $400 million) that the province pays to match contributions (due to higher salaries), Ontario is also on the hook for covering the cumulative expenses resulting from poor investment performance and inadequate investment returns of the plan over the years.

Agriculture

• The budget extends the current risk management program (BRM) for grain and oilseed farmers, and implements new risk management programs for the cattle, hog, sheep and veal sectors. It also introduces a self-directed risk management program for the edible horticulture sector. CFIB members believe that BRM tools are a last resort, but when producers do need them, they have to work. We hope that these BRM improvements are transparent, accessible and predictable.