Budget 2012: Budget Highlights

Your bullet-point guide to today's key budget announcements.

By Hamutal Dotan

The key facts and figures, cuts and proposals, that make up Ontario’s proposed 2012 budget.

Key Figures

• $15.2 billion: 2012-13 deficit projection
• 1.7%: government-projected 2012 GDP growth (private sector projection is 1.9%)
• $17.7 billion in cost containment measures to be implemented over the next three years: $4.9 billion from efficiencies; $6 billion in limiting compensation to school boards, physicians, and public servants; $6.8 billion from “contain[ing] costs across the broader public sector.” In total, 73% of cost containment is planned to come from limits on the public sector.
• 1% average annual program spending growth.
• $8,560: per capita program spending in 2011–2012.

Taxes and User Fees

• No personal income tax increase.
• Freeze of corporate income tax and Business Education Tax rates. The corporate income tax rate would be frozen at 11.5%, with scheduled reductions to 11% (originally set for July 2012) and 10% (originally set for July 2013) delayed until the deficit is eliminated.
• Increasing many user fees (such as drivers’ license fees) to full cost-recovery levels.

Labour, Compensation, and Government Management Costs

• Bargaining this year with public sector employees. “The government’s fiscal plan,” says today’s budget, “provides no funding for incremental compensation increases for new collective agreements.”
• Public sector pensions “would be required to reduce future benefits or ancillary benefits before further increasing employer contributions.” This would be subject to limits set “in exceptional circumstances” and would affect future benefits but not any that have already been accrued.
• Reforms to arbitration procedures.
• Additional two-year pay freeze for MPPs (for a total of a five year freeze).
• Base salary freeze for executives at hospitals, universities, and government agencies.

Health Care

• Ontario Drug Benefit fee introduced for high-income seniors (those above $100,000, or above $160,000 for couples), in the form of a $100 deductible (single) or $200, plus 3% of income over that threshold.
• Spending growth capped at 2.1.% annually (average over next three years).
• Increasing shift to community-based care and away from hospital-based care; this includes integrating primary care into the Local Health Integration Networks, increasing home care, and increasing the use of non-profit clinics. Home and community care service spending will go up, on average, by 4% a year.
• Maintaining current compensation levels for physicians through the next round of bargaining.
• Hospital operating base funding held at current levels; no annual increase. (Overall hospital operating funding still grows, by 2%, due to other program goals like wait-time initiatives.)
• Recommitment to the proposed Healthy Homes Renovation Tax Credit, which aims to defray costs associated with outfitting homes so seniors can stay in them longer, rather than moving to long-term care facilities.

Social Services

• As leaked a few days ago, welfare rates are frozen: “The government is not proposing any increases to social assistance rates at this time.”
• Delayed implementation of already-announced increases to the Ontario Child Benefit. It will now go up from $1,100 to $1,210 in July 2013, and to $1,310 in July 2014.

Economic Development

• Creation of a Jobs and Prosperity Fund that will consolidate various business support programs, saving $250 million (in 2014-2015) by so doing.
• Creation of a Jobs and Prosperity Council which “will advise the government on a plan to boost Ontario’s productivity.”
• Increasing revenue from the LCBO by $100 million next year, via efficiencies, and another $100 million in each subsequent year by increasing the number of stores and the size of some others.
• “Modernizing” the Ontario Lottery and Gaming Corporation and expanding the scope of some gaming activities, projected to bring in an additional $1 billion/year by 2017–2018.

Energy and Environment

• Clean Energy Benefit capped at 3,000 kilowatt hours/month (expected start day is September 1, 2012). Residential customers would still fall under the cap (average home use is 800–1,000 kilowatt hours/month), as would most small businesses; this is aimed at large users.
• Various streamlining proposals are included in the budget to make regulatory systems more efficient. This includes measures to automate some permitting processes, “conduct resource management with a stronger regional focus and fewer field offices,” and “redesign science and delivery activities to shift away from a species-by-species approach to a risk-based ecosystem/regional approach.”

Education

• Full-day kindergarten implemented by September 2014.
• Class-size caps maintained for early grades.
• 30% tuition tax credit for undergraduates maintained.
• Bargaining with public-sector workers this year: government is calling for a two-year wage freeze for education employees and school boards, a freeze on banked sick days and the introduction of a short-term sick leave plan (in which leave is not carried forward from year to year).
• Amalgamation of school boards and closing of schools “in areas of low population growth and declining enrolment.”

Toronto-Specific Impacts

• Cancellation of a previously announced Sunnybrook Health Centre project, to replace their hemodialysis unit.
• Closure of the Thistletown Regional Centre.
• $1.7 million in “efficiencies” to language training and newcomer-settlement programs, many of which are most active in Toronto.
• Operating grants to the following cultural organizations and agencies will be reduced: the Art Gallery of Ontario, the McMichael Canadian Art Collection, Ontario Heritage Trust, the Ontario Science Centre, the Royal Ontario Museum, and Luminato.