PCs kick off election campaign with platform promise to run a deficit in their first year

Jessica Smith Cross QP Briefing - November 26, 2017

PC Leader Patrick Brown unveiled his party’s election platform Saturday, six months before the scheduled campaign, promising tax breaks and benefits for middle- and low-income families — and a $2.8 billion deficit next year.

The deficit baked into the platform puts the party in stark contrast to the Liberals, who have been touting their government’s return to balance.

The PCs’ costed platform promises tax breaks and child care refunds for lower and middle class Ontarians, funded by opting into the federal government’s carbon pricing plans as of July 1, 2019.

The PCs are also pledging to withdraw from the provincial government’s cap-and-trade program, as well as most of the Climate Change Action Plan environmental initiatives the cap-and-trade revenues funds.

Other spending cuts would be identified through a value for money audit, that would trim government spending by 2 per cent across the board, and would take effect in the 2019-20 fiscal year.

The published platform looks like a magazine called "People's Guarantee," and features Brown’s smiling face on the front.

The guarantee is that if Brown does not achieve five specific commitments in his first mandate, he will not seek a second. They are:

  • To lower income taxes for the middle class by 22.5 per cent
  • Provide a 75 per cent refund for child-care expenses,
  • Twelve per cent off hydro bills,
  • Pass the "largest mental health commitment in Canadian provincial history”
  • Pass the first Trust, Integrity and Accountability Act.

At the Toronto Congress Centre, Brown’s speech was cheered on party members, who packed the large hall. Brown said his platform would answer the long-held questions about what his plan is and why he’s in politics.

“I view public service as an ability to better your community, that’s why I’m in public service,” he said.

The five commitments

The middle-income tax bracket would see a rate cut of 22.5 per cent, phased in between 2020 and 2022, and the lowest bracket would see a 10-per cent rate cut, also ramped up between 2020 and 2022. These tax breaks would cost the government $3.27 billion a year in foregone revenue by the time they'd be fully implemented in the 2021-22 fiscal year.

The party is also promising to increase the Ontario Sales Tax Credit by $100 a person, which the province’s lowest-income families will receive, even if they pay little or no tax.

According to the PCs’ calculations, families earning between $100,000 and $200,000 will see an average 20 per cent reduction in their tax owing.

The second commitment — a 75 per cent refund on child-care expenses — would come in the form of a new Ontario Child Care refund, would give lower-income households — making $35,000 or less — a 75 per cent refund on eligible child-care expenses up to $9,000 for a child under six, or $5,000 for a child aged six to 15. The per cent of the refund would decline with rising income, so that families where each parent makes $200,000 would receive none.

The PCs would also keep the Liberal government’s promise to build 100,000 new child care spaces, the platform says.

The third commitment — to reduce the average hydro bill by an additional 12 per cent — is achieved by rebating the government’s portion of Hydro One dividends — currently worth about $350 million a year — on ratepayers bills and moving conservation programs from the rate base to the tax base, as well as walking away from any energy contracts it can, where there are cancellation benefits.

The 12 per cent promise is above and beyond the government’s 25 per cent Fair Hydro Plan, which the PCs would maintain.

The fourth commitment would see the province match the federal government’s 10-year, $1.9 billion mental health spend, investing it in a range of mental health programs, including improved services for children and youth.

The last commitment is to pass the Trust, Integrity and Accountability Act, which the PCs are aiming squarely at the Liberal government’s ethical transgressions, as the Tories see them. The bill would, among other changes, ban ministers from raising funds from stakeholders they do business with, a change the party has been calling for since the cash-for-access scandal, and restore the Auditor General’s oversight of government advertising.

The costing

The platform and its costing is based on the Liberal government’s plans and fiscal projections, where the only deviations are outlined and costed. Former Parliamentary Budget Officer Kevin Page reviewed in the costing, and his endorsement — that it's “deemed reasonable” — is printed on the platform's last page.

That means a PC government would keep the Liberals’ signature all-day kindergarten and OHIP+ youth pharmacare programs.

The most significant change from the Liberal plan is exiting the cap-and-trade program and adopting the federal government’s carbon tax backstop as of July 1 2019.

In making that change, the PCs would cancel most of the Liberal government’s various environmental initiatives under the Climate Change Action Plan, which include electric vehicle supports and building retrofits.

However, the party would maintain the Liberal government’s Regional Express Rail plans, which are currently budgeted with cap-and-trade funds.

The PCs project that the switch from cap-and-trade to a carbon tax would cost the government $1.5 billion in the would-be PC government’s first year, but they project cancelling the Action Plan spending would save the government $1.9 billion in each of the last three years of a four-year term.

The switch to a carbon tax would also bring in significantly more money, according to the PCs — $2.4 billion more than cap and trade would by the 2021-22 fiscal year.

That extra cash would be how the tax breaks in the platform are funded, which is why the PCs frame the carbon tax as “revenue neutral.”

Overall, however, the platform sees a PC government bringing in less revenue and spending more than the Liberal government has indicated its fall economic statement — the same fiscal outlook the PCs’ platform is based on.

That includes the spending cuts identified through the 2-per cent value for money audit, which the platform projects would find savings of $1.1 billion 2019-20 fiscal year, $2.2 billion the following year, and $2.8 billion the year after.

By 2022, the PCs project their government would bring in about $168 billion in revenue — versus $170 billion in the Liberal government fiscal projections — and the government would spend $167 billion that fiscal year — versus the $155 billion in government projections.

The PCs’ costing shows the government would see a $2.8 billion deficit in year one, an $8 million surplus in year two, a $521 million surplus in year three and a $727 million surplus in year four.

Nevertheless, the platform document criticizes the Liberal government's record on debt.

"The province now pays more interest on debt each year than it spends on post-secondary education, autism support for youths, community safety, or Indigenous people. Rising interest on the debt will continue to squeeze important programs Ontarians depend on. This simply can’t continue," it says.

The the tories promise that any reserve funds not used will be applied in full to reduce debt obligations by an equivalent amount.

"Patrick Brown and the Ontario PCs will create a debt repayment plan where budget surpluses go towards paying down the debt. We will commit more than $1 billion towards debt repayment during our mandate," it says.

Other major promises

The PCs are also promising to spend $5 billion on subway systems in the Greater Toronto Area, which would be accomplished by uploading the subway system from TTC. However, the TTC would keep all the fare box revenue from the subway service. The funding would go to the Relief line, the Scarborough subway, a Yonge Subway extension and the westward extension of the Eglinton Crosstown to the University of Scarborough Campus. The provincial government would also take on responsibility for subway maintenance.

The PCs are also promising to build 15,000 new long-term care beds within five years, and match the government’s commitment to building 30,000 beds within ten years.

Other promises include a Great Lakes clean-up fund, anti-gang and human trafficking investments, wifi on GO Trains, a winter tire tax credit and a dental program for low-income seniors.

Tory reaction

Patrick Brown wasn’t available to reporters after his speech, but some Tories weighed-in on what they heard.

“I thought it was great,” said PC MPP Todd Smith. “I have never been to a PC event that had that much energy in the room. I thought Patrick was performing very, very well, and there’s a lot of optimism that we actually have our policy out there and something positive we can take to Ontarians.”

Smith himself has been leading policy development on the energy file, and he’s eager to tell people they’ll receive Hydro One dividends back on their hydro bills under a PC government. However, he admitted that it won’t be as fun to campaign on a promise to run an $2.8 billion deficit next year.

“Honestly, that’s not something we look forward to," Smith said. "However, we are committed to making sure we get the province back on track financially over the next two, three and four years of a PC mandate. We have a number of promises that we’ve rolled out that we think are necessary, particularly, on the relief that’s necessary on income taxes and child care, that’s a huge issue we’ve heard so much about. And the mental health piece is enormous for people right across this province. And then, on top of that, the hydro relief.

“There are all things we’ve been hearing a lot about from people, they need relief and we need to provide it now.”

MPP Sam Oosterhoff said he believes the platform has a positive message that’s going to resonate across the province.

On the issue of the deficit, he said he believes people will understand the investments the PCs are promising to make are necessary — and he pointed to the platform’s promise to pay down the provincial debt with surpluses and reserve funds.

“We’re talking about, over the course of our four-year mandate, paying a billion dollars off of that debt,” he said. “The Liberals have no plan when it comes to debt repayment. They haven’t talked about debt repayment at all, and they’re unwilling to.”

Meanwhile, Doug Ford — who once toyed with the idea of running for the Tories, but is now focusing on a Toronto mayoral run instead — was also enthusiastically supportive of the plan and of Brown’s performance.

“There’s tons of energy there. Patrick did an incredible job. The team’s ready,” he said.

However, he warned that the PC government might find a surprise in the government’s books that could make their fiscal position worse.

“I’m pretty sure they have to look at the books if they’re fortunate enough to get elected,” he said. “Let’s see what happens after they look at the real financial statements.”

However, the convention wasn’t completely free from unhappy conservatives. Jim Karahalios, a long-time member who's now a fierce critic who is advocating against the party's carbon tax plan and organizing a drive to change the party’s constitution, had his membership stripped and was denied observer status.

It’s an unusual step, as the PCs let their critics from other parties attend the convention as long as they pay an observer fee — but it was taken, according to the party, because they feared that Karahalios would disrupt the speech with a protest. (emphasis added)

The other parties’ reactions

Transportation Minister Steven Del Duca provided the response on behalf of the Liberal party, warning that the PC plan will lead to service cuts in health and education similar to those seen of under former premier Mike Harris.

“I didn’t actually believe, as a human being, that time travel was actually something real. But in that auditorium today I felt like I had been transported back to 1995 in Ontario as I listened to another conservative party leader make all kinds of promises to the people of this province, and fundamentally refuse to have the courage to stand up and say what he really believes in,” Del Duca said.

Del Duca touted the Liberal government’s investments in free tuition for low-income students, OHIP+ and transit investments, all of which the PCs say they will maintain. Del Duca also touted the plan to increase the minimum wage to $15-an-hour by Jan. 1, 2019, which the PCs have instead decided to phase in by 2022.

Ontario NDP campaign director Michael Balagus spoke on his party’s behalf, saying millions of Ontarians have decided that the Wynne must go.

“The question now becomes who do you want as the next premier of Ontario, Andrea Horwath or Patrick Brown. I think what we saw today is that choice is beginning to crystalize.”

Like Del Duca, Balagus warned that the drawbacks of a PC government would stem from what isn’t in the platform.

“We’ve never seen a conservative government in Canada that doesn’t cut and doesn’t privatize,” he said.

This QP Briefing article appears online QP Briefing at:

http://www.qpbriefing.com/2017/11/25/pcs-kick-off-election-campaign-platform-promise-run-deficit-first-year/


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