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Blog Posted in avatar   Allen Small's Blog

Ontario Budget 2012 - Austerity?

By Allen Small
Posted Mar 29, 2012 in Politics
Cuts? Not so deep really, they should have been different cuts, but the Liberals just don't get it yet.
The Ontario Budget released March 27, 2012, mostly affected the one million or so public sector workers in Ontario's government. Thats a lot of voters and their families to antagonize, and believe me they are voters.
All the public sector unions are gearing up for the election battle to come. It may not be for a year or so, but it will happen sooner than later.
For the public sector employees, the Liberal budget has frozen salaries, grid moves, pensions and these things are definitely going to happen, for sure, because they said so.....or else.
The Ontario PC's have already decided they will not support the budget. I'm not certain why, the budget calls for less spending than the PC's wanted in the recent election. So it sort of looks like a start toward fiscal sanity, maybe.
That puts the ball in the court of the NDP, who seem to be non-commital, they will let the people decide. Right. You may have your say by contacting the NDP, and giving them an earful. It's a good publicity ploy anyway. Some time next week they will say: "you know, nobody really wants another election." They will hold their noses and vote with the Liberals to pass this thing, OR maybe just "sick out" a few MPP's (just three sickies are required I think). But they need to somehow court the public sector unions for the inevitable election fight. I'll let them worry on that.
Meanwhile the Liberals will keep their pet projects, all day kindergarten, subsidized but GREEN power generation, build more and larger LCBO stores to better monopolize the market for booze, and they are getting deeper into the gaming industry.
These are effectively additional taxes. Why? Because many people drink liquor, beer or wine, and the markup is high because the government has a monopoly. Think of it like a tax on bad habits.
Similarly, more casinos in more populated parts of the province will fleece the gamblers, increasing the odds of taxing the stupid. I will include myself in that group, because I do buy the odd lottery ticket, really stupid.
This neat little graphic at the Globe & Mail, shows how the deficit will deplete (they hope), and how the cuts help the decrease and the added revenues help too.
The video and text below it, represents my 5 minute response to this budget.
Ontario is in financial trouble, that's according to the proposed budget tabled yesterday by Finance Minister Dwight Duncan.
Less than six months ago, during the provincial elections, none of the major parties made the debt or deficit an important issue.
No one but us, the Ontario Libertarian Party; the record is there for everyone to see.
Ontario didn't get into trouble in just six months. This trouble has been building for decades and was greatly aggravated in recent years.
The Liberals have doubled the Provincial debt and deficit since coming to power in 2003, doubled in less than nine years.
Finance Minister Duncan blames the global recession, and the stimulus spending, that the government chose to do, for creating the current problem.
But the spending problem began in their first budget, well before the recession. The Liberals raised taxes, pulling more money out of the pockets of families, and increased government spending.
Their spending problem was aggravated by an economic slowdown and a reduction in government income.
So, what if your family runs up a large credit card bill during hard times? Would you continue spending lavishly, or consider cutting back on some frills? Would you decide to take on more services, or consider doing with less, and paying off your debt?
I’m not the only one criticizing the Liberals; their own people have been their greatest critics.
The provincial Auditor General in his last report pointed to excessive spending and poor management in adding heavily subsidized wind turbines and solar panels to everyone’s electricity bill, and also increasing government debt.
Don Drummond, in his recent report on reforming the public service, echoed the Auditor’s criticism, and came up with 362 recommendations to balance the budget or the deficit would balloon to $30 billion in five years.
To add to the criticism, Moody's, a financial rating agency warned Ontario that it's credit rating would be in jeopardy if its lavish spending habits don't change.
And what does balancing the budget actually mean? To compare it to your family credit card bill again, it means just making the minimum payments without paying back what is owed. And worse, the government has said it won’t balance the budget for another five years, so debts will continue to increase.
So, what have the McGuinty Liberals done in this budget? They have decided use the coercive powers of government to freeze the salaries of all public sector employees. The public sector will take the brunt of the cuts, in salaries and pensions, but many of the items recommended by the Drummond Report were ignored.
Many of the frills are still in place and the government has chosen to increase its income by doing things like building more and larger LCBO stores, and more casinos, both of which act like taxes on consumers.
The budget does not address the debt. Servicing the massive debt is Ontario's third largest annual expense, and that assumes that interest rates will remain low.
The Liberals have also cancelled a proposed cut in corporate taxes.
Libertarians would not cancel the cut in corporate taxes.
We believe that jurisdictions that have the low corporate tax rates attract more business and industry. These will create real jobs that would ultimately improve Ontario’s economy.
Libertarians would choose to eliminate or amalgamate entire ministries and many agencies that provide little or no value to the province, and where the free market could do a far better job.
We all want Ontario to be the best place to live, I’m sure that is true of the government. I believe that their intentions are good, however, sometimes-good intentions have very bad results.
This is what has happened here. The government has a spending problem that it does not want to admit; I have no confidence in this budget solving that problem. I believe its time to change the government.

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