A promise or a compromise? Assessing what the Liberal Party platform means for Ontario

A promise or a compromise? Assessing what the Liberal Party platform means for Ontario

Justin Trudeau, leader of the Liberal Party of Canada and underdog in the federal election campaign, has won a majority government.

Most recognize that the 2015 election was a unique snapshot in Canada’s political history. Not only did candidates undergo (and survive!) one of the longest campaigns on record, but this was also one of the most costly and, arguably, nastiest experiments on Canada’s democratic experiment.

As analysts reflect on the winning strategies and the slew of “thank you” speeches come to a close, it’s time for elected officials to act upon their promises. Perhaps easier said than done, it is worth assessing whether leaders will hold true to their promises or whether they will have to compromise their agenda. Under the backdrop of changing political realities, an uncertain economic environment, and growing citizen expectations, we now turn our attention to how elected officials will turn their promises into a reality.

The Institute analyzed the platform put forth by the Liberal Party of Canada to see what it means for Ontario.[1] To narrow the scope, the Institute looked at key initiatives proposed for four key policy files: health care, education and skills training, infrastructure, and supports for small businesses. Thinking about how these campaign promises relate to major policies in Ontario is important – these files represent major proportions of public spending and are key to enhancing Ontario’s economic competitiveness and prosperity.

Honing in on health care

In 2013-14, the government of Ontario spent $48.9 billion (42.2 percent of the total budget) on health care.[2] The Liberal Party platform focuses on revisiting intergovernmental transfer payments as well as increasing funding for home care and children’s health. How do these initiatives fit with existing policies in Ontario?

Federal promise

Cost ($M)

Ontario impact

Policy

Description

Consideration

Details

Transfer payments

Negotiate a new Health Accord

2,950

Consider equity and sustainability of the Canada Health Transfer

Funds health care and supports to provinces and territories

Home care

Increase funding for home care

Coordinate with efforts to strengthen home and community care

Supports patients and seniors who need support living at home

Children’s health

Raise vaccination rates and raise children’s’ health risks awareness

30

Align with Healthy Kids Strategy

Promotes children’s health and well-being

Total

2,980

The Institute strongly encourages the federal government to work alongside its provincial counterparts to ensure that resources directed toward Ontario’s health care system and initiatives are streamlined, effective, and efficient. Notably absent from the Liberal’s platform is a federally-led pharmacare program. As suggested in Working Paper 20, a national pharmacare program could enhance administrative efficiency, purchasing power, and harmonize access to drugs across provinces.[3] The Institute hopes to see this type of initiative adopted by the federal government in the near future.

Enhancing education and skills training

The government of Ontario spent 26.9 percent of its 2013-14 budget (or $31.2 billion) on the education and skills training sectors.[4] According to their platform, the Liberals are looking to invest in postsecondary education as well as promote the skilled trades and apprenticeship. How will these promises impact Ontario’s existing initiatives?

Federal promise

Cost ($M)

Ontario impact

Policy

Description

Consideration

Details

Postsecondary education

Eliminate existing credits and increase upfront non-repayable grants

-3,365

Coordinate information and funding provided by the Ontario Student Assistance Program

Provides student grants and loans

Increase the Canada Student Grant for low-income families

3,225

Streamline eligibility requirements with the Ontario Tuition Grant

Funds postsecondary education

Apprenticeship and skills training

Increase funding in Labour Market Development Agreements and other skills training programs

1,625

Ensure that resources are directed toward effective programs and that Ontario receives equitable funding

Integrates immigrants into the labour market, provides foundation skills, and supports technical training

Expand Pre-Apprenticeship Training Programs

800

Avoid duplication with the Ontario Youth Apprenticeship Program

Apprenticeship training for high school students

Consider resources directed toward the Apprenticeship Scholarship

Funds student training

Total

2,285

The Institute stresses the importance of evidence-based and coordinated education and skills training policies for Ontario. In particular, policies implemented by the federal government should take into consideration existing provincial initiatives as well as ensure that resources are managed effectively and efficiently. The Institute has previously recommended adopting innovation in school curriculum and enhancing teachers’ mandatory qualifications.[5] It will be interesting to see if a national effort to address these issues will be furthered by the newly elected federal government.

Investing in infrastructure

About 10.2 percent of Ontario’s 2013-14 budget ($11.8 billion) was dedicated toward infrastructure investments, with the majority of resources directed toward transportation and transit.[6] Further, the 2015 Ontario Budget commits more than $130 billion in infrastructure over the next 10 years – the largest infrastructure investment in the province’s history.[7] The Liberal Party platform proposes investing in three types of infrastructure projects (public transit, social, and green) to boost economic development, reduce air pollution, shorten commute times, and strengthen communities. How do these compare to Ontario’s planned investments?

Federal promise

Cost ($M)

Ontario impact

Policy

Description

Consideration

Details

Public transit infrastructure

Fund public transit in provinces, territories, and municipalities

5,650

Harmonize with Moving Ontario Forward and other plans to finance new roads

Expand provincial highways and connect to municipal roads, transform the GO rail network, and expand local transit, and transportation and roads in the GTHA

Social infrastructure

Invest in affordable housing, seniors’ facilities, early learning and child care, and cultural and recreational infrastructure

5,650

Complement  the Ontario Community Infrastructure Fund and the Small Communities Fund

Funds infrastructure in small, rural, and northern communities, as well as priority projects and critical infrastructure

Green infrastructure

Finance local water and wastewater facilities, clean energy, and climate-resilient infrastructure

5,650

Build off the Natural Gas Access Loan and the Natural Gas Economic Development Grant

Funding to lower businesses’ electricity prices and reduce overall emissions

Balance alongside the Feed-in Tariff program

Encourages the development of renewable energy technology

Total

16,950

Investing in productivity-enhancing infrastructure assets is crucial to support Ontario’s economic competitiveness and prosperity. In Working Paper 22, the Institute recommended prioritizing infrastructure projects according to their returns on labour productivity. Our analysis revealed that marine engineering as well as health care and social assistance yield the   greatest returns to labour productivity in Canada.[8] In addition to making strategic investments, the Institute also recommended streamlining project selection, implementing user fees, and facilitating private investment. The Institute hopes that these findings will be taken into consideration as the federal and provincial governments develop and execute their infrastructure plans.

Supporting small business

In recognition of the role small businesses play in the economy, both the federal and provincial governments offer supports designed to encourage small business growth. Many of these programs enhance the financial resources available to business owners, principally through the tax code. The small business deduction is one of these policies and provides preferential tax treatment for businesses reporting less than $500,000 in annual earnings before tax. Offered by both levels of government, what do changes in the small business deduction mean for Ontario?

Federal promise

Cost ($M)

Ontario impact

Policy

Description

Consideration

Details

Small business deduction

Lower the tax rate from 11 to 9 percent

3,200[9]

Provincial small business deduction

Reduces the tax rate from 11.5 to 4.5 percent

Minimize personal  income tax invasion

Total

3,200

In Working Paper 21, the Institute found that Ontario, compared to its peers, has the largest tax rate differential between small and large firms. Importantly, since the small business deduction is conditional on remaining small, it is seen as a political tool that discourages business growth.[10] Accordingly, the Institute has proposed either a flat corporate tax rate or a progressive tax scheme as alternative tax arrangements to support business growth.[11] When it comes to the federal government’s election promise on the small business deduction, the Institute is looking for a compromise.

Lights, camera, action!

The spotlight is on the federal government to accomplish its political agenda, and time will tell whether the Liberal Party will make true on its promises or settle with a compromise. Health care, education and skills training, along with supports for infrastructure and small businesses, are crucial files where Ontarians – and Canadians – can benefit from evidence-based and coordinated policy-making. Despite a majority government, the political thrill ride is not over and we have yet to see what “real change” looks like. Stay tuned!

 

[1] Costs reflect proposed spending at the national level between the 2016-17 and 2019-2020 fiscal years. “A new plan for a strong middle class.” Liberal Party of Canada. (2015). https://www.liberal.ca/files/2015/10/New-plan-for-a-strong-middle-class.pdf.

[2] The Honourable Charles Sousa and The Honourable Deb Matthews. “Public accounts of Ontario 2013-2014: Annual report and consolidated financial statements.” Ministry of Finance. (2014): 11.

[3] Institute for Competitiveness & Prosperity. Working Paper 20, Building better health care: Policy opportunities for Ontario. (2014): 53.

[4] The Honourable Charles Sousa and The Honourable Deb Matthews. “Public accounts of Ontario 2013-2014: Annual report and consolidated financial statements.” Ministry of Finance. (2014): 11.

[5] Task Force on Competitiveness, Productivity, and Economic Progress. Thirteenth Annual Report, “Finding its own way: Ontario needs to take a new tack. The Institute for Competitiveness & Prosperity. (2014).

[6] The Honourable Charles Sousa and The Honourable Deb Matthews. “Public accounts of Ontario 2013-2014: Annual report and consolidated financial statements.” Ministry of Finance. (2014): 16.

[7] The Honourable Charles Sousa. “Building Ontario up: Ontario budget 2015.” Ministry of Finance. (2015): 36.

[8] Institute for Competitiveness & Prosperity. Working Paper 22, Better foundations: The returns on infrastructure investment in Ontario. (2015): 25-32.

[9] Dachis, Benjamin, and John Lester. “Small business preferences as a barrier to growth: Not so tall after all.” C.D. Home Commentary no. 426, (2015).

[10] Dachis, Benjamin, and John Lester. “Small business preferences as a barrier to growth: Not so tall after all.” C.D. Home Commentary no. 426, (2015).

[11] Institute for Competitiveness & Prosperity. Working Paper 21, Open for business: Strategies for improving Ontario’s business attractiveness. (2015): 42.

Photo Credit: erhui1979, Getty Images 

Category: Public Policy