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McGuinty's Second Budget

Canadian political bloggers seem to be so focused on the chaos in Ottawa to have noticed the Ontario 2005 budget announcement yesterday.

Well, I have been too busy to study it thoroughly, but thought I might step into the vacuum and make a few comments. That's what bloggers do.

Beyond the CBC overview I've linked to above, Murray Campbell's report in the Globe today also seems thorough.

Spending, including interest, is up 4.2%, compared to revenues up 5.9%. Nothing dramatic here, but the budget deficit remains $2.8-billion. Health care is now 40% of government spending (including interest), and growth in this category this year was 5.9%. The other major area of growth was education, with other ministries cut, or kept at inflation-level growth.

A return to support for health and education was what got Dalton McGuinty elected in the first place, and I don't think many voters will complain about that sort of spending right now. I think there is still a feeling that we need investment there. In fact, overall, it seems to be a decent, if uneventful, budget.

Where McGuinty has gotten into trouble has been in terms of broken promises over balanced budgets and tax increases. Looking back at the election of 2003, I'm not one of the cynics who believes that the Liberals or anyone else knew how bad a mess Ontario was in. At the time, I remember debate about whether there was any deficit at all... not about whether Ernie was hiding a huge one.

Nevertheless, McGuinty made the promises he did and found himself in a jam. I think the question of whether or not he will be able to recover politically is still open, but I continue to think that he didn't handle his first-year problems in the best possible way.

One example is the Ontario Health Premium. I was amazed to see that its revenue is $2.4-billion, compared to personal income tax revenues of $20.0-billion. That's a lot for such a non-progressive tax. (It is close to a flat tax for people with low to mid-range incomes, and then doesn't grow once your income passes $260,000.)

It seems obvious to me that McGuinty's choice to implement the Ontario Health Premium instead of a modest (and fairer) income tax increase was driven by the political difficulties of his unfortunate record on promises. In other words, his campaign errors have compromised his ability to govern well. I still think that we are much better off with Dalton McGuinty than if we had reelected Ernie Eves. In 2007 we will decide whether or not we might be better off with John Tory. That's long enough from now that anything can happen.

In the meantime, it looks like my riding may need a by-election. My MPP is going to run in the federal election and has a decent chance of unseating the Liberal.




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