TORONTO--Ontario will not be able to afford tax cuts and even a token commitment to revitalizing public services in the next fiscal year, even with higher-than-expected revenues for 2002-3 and a windfall from the Health Care Accord, says a new study by the Canadian Centre for Policy Alternatives.
The report, Coming home to roost: Ontario pre-budget update, part of the Ontario Alternative Budget 2003, demonstrates that when revenue growth and political commitments are taken into consideration, the Ontario government is left with roughly $2 billion both to cover $2.1 billion worth of tax cuts and to address massive unmet funding needs in areas like water quality, public infrastructure, housing, child care and social assistance.
According to author Hugh Mackenzie, "It comes down to the same choice. Tax cuts -- this time more tightly targeted to high-income individuals and corporations than ever -- or public services."
Provincial spending on public services has been declining steadily as a share of our economy since 1992-3, when it hit its recession peak of 17.1%. By the time of the election of the Harris Government in 1995, the share had already dropped to 15.1%, the 25-year long-term average in Ontario. In the election year of 1999-2000, the year of the first budget surplus, the share had dropped to 12.9%. And since the budget was balanced, the share has dropped still further, to 11.8%.
The Ontario Alternative Budget research estimates the impact of all Ontario tax cuts, including corporate property tax cuts, employer health tax cuts and the $700 million carrying cost for borrowing to pay for tax cuts, at $15.4 billion. The OAB determines that the present government's tax cut policy--with an impact of$15.4 billion in lost spending--has deliberately destroyed Ontario's revenue base and created a public services crisis in this province.
"There are critical issues facing the province - the very issues whose debate the Government is trying to avoid, by, in effect, privatizing the budget process and making the so-called budget a private PC Party campaign event," says Mackenzie.
"If the Government survives to implement a real budget for 2003-4, we can expect to see continued neglect of important areas of public services and full use of every budget trick available to the government, all put to the service of the Conservatives' ideological fixation with tax cuts," concludes Mackenzie.