Queen's Park Watch: Ontario Budget Winners and Losers
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Queen’s Park Watch: Ontario Budget Winners and Losers

The dust is finally settling on the Ontario budget debate, and whoever won, it wasn't taxpayers.

It’s been a fun week for Queen’s Park watchers. On Monday, after weeks of negotiation, the Liberals avoided an election in part by agreeing to a 2 per cent bump in the highest marginal tax rate for Ontarians earning over half a million dollars annually. (The tax has been dubbed, apparently without irony, the “temporary Deficit-Fighting High-Income Tax Bracket.”) In return, the NDP, sore winners that they are, didn’t actually support the budget, but did allow it to pass by abstaining from the vote. The Tories did what they said they were going to do back in March and rejected it outright.

In response, bond-rating agency Standard and Poor’s expressed doubt yesterday about the Liberal government’s ability to meet ambitious deficit reduction targets and revised their outlook for Ontario from stable to negative.

So who wins and who loses in all this?


The obvious winners are the NDP. The inclusion of the popular top-hat-and-monocle surtax into the budget is a two-fer: not only does Andrea Horwath get credit for sticking it to the rich, but, by rolling over on the issue, the premier chucks what’s left of his credibility (“No new taxes!”) into the wood-chipper. Not bad for a party with only seventeen seats in the legislature.

And on top of all that triumph, the New Democrats still get to pander to their base, as they make ominous noises about blowing any remaining austerity measures to shreds. Speaking at a rally of public service employees last week, Horwath seemed tacitly, if not explicitly, aligned with the unions in opposing the two-year public sector wage freeze that’s assumed in budget calculations.

The victory could be short-lived, of course. If the NDP end up scuttling key deficit-reduction measures, and the deficit doesn’t drop as projected, Ontario will face declining investor confidence and higher borrowing costs. Under this scenario, we could see cost-cutting measures more draconian than any being contemplated today. Public opinion could turn against the Dippers much like it did against Bob Rae in the nineties.


The Liberals were dealt a lousy hand and played it poorly. They underestimated the enthusiasm with which the multitudes would embrace a fat-cat surtax, and specifically ruled out new taxes. That miscalculation turned Horwath into a populist hero while making a liar out of Dalton McGuinty.

What the Grits did win was the chance to stay in government a while longer, and potentially to redeem themselves with successful deficit-cutting and economic growth. Regardless, the Liberals will want Dalton McGuinty to fall on his sword before the next election, because they’re fearful that voters will believe him to be the tax-mad prevaricator the Tories have always claimed.

The Progressive Conservatives lost too. By announcing their intention to vote against the budget from day one, they effectively exiled themselves from the high-profile budget negotiations, leaving them to whine ineffectually from the sidelines while the NDP acted like the official opposition. Visibility aside, a Tory presence at the table might have brought about some Liberal concessions on key Conservative talking points like job creation.

It’s possible that the PCs are playing the long game here, expecting that the the Liberal-NDP entente will prove a fiscal failure, leaving voters clamouring for some Tory paladin to ride in and clean up the socialist mess. However, given all the Conservative missteps so far, there’s a good chance it won’t be Hudak saddling up the white horse.

And where do us regular hockey watchin’, beer drinkin’, election ignorin’ taxpayers land in all this? If enough expense can still be shorn from the budget, and if the economy grows as hoped, and if the rich cooperate on their tax returns, and if the rating agencies can be cajoled and coerced into submission, there’s an outside chance we could be running a surplus in five years. But you might want to consider cutting a couple more holes in your belt, just in case.