Today, the Ontario budget came down with little fanfare. Let's face it, if you read the news at any point over the last three weeks, you knew what was going to be in it. You knew that there was going to be news about Hydro One and beer sales. You knew that the deficit was going up to 10.9 billion this year from 10.5 billion last year.
Debt and deficit numbers are sometimes a little abstract. But if you want to know why they matter, this year's budget finally unmasked the ugly truth. If you want to know why nurses are being fired across Ontario, this budget paints a pretty good picture as to why....
Let's start with the basics. According to the Ministry of Finance, current spending at the Ministry of Health is $50.172 Billion. The Canada Health Transfer Payment received by Ontario this year was $13.1 Billion, meaning that the federal government is paying for more than a quarter of the healthcare budget in the province. That's up, in case you were wondering, from the approximately 5 Billion that the province received in transfer payments a decade ago.
Healthcare is a public trust in this country, it's the single largest budget item. What it isn't, is the fastest growing budget item. You want to know what is?
It's not education. It's not infrastructure (regardless of what the Premier says) or universities and colleges.
It's servicing the debt. The interest on the debt is increasing at a rate of 5.7%.
Why is this important? Well, many constituents have contacted my office upset at the government trying to sell Hydro One. The government is saying that they're going to use the projected 9 billion dollar value of the sale to both pay down the stranded hydro debt (5 billion) and pay for transit (4 billion).
The thing is, in the budget last year, the government said that it required only 3.1 billion in asset sales to contribute to its transit strategy of 130 billion over 10 years. This precipitated the sale of Ontario's shares in General Motors among other things. This year it's precipitating the sale of 60 percent of Hydro One. And, as they've said repeatedly, 4 billion from that sale will go to fund transit.
Now I know what you're saying, if they sold the GM shares to fund transit because they needed the money, why are they selling Hydro One to fund transit?
Spending actually goes up 2.4 billion in this budget while the government is projecting that the deficit should go down next year from 10.9 billion to 8.5 billion.
That's a 4.8 billion dollar hole. Closing tax loopholes, chasing tax evaders and levying a new beer tax will only get you a couple hundred million. You need 4 billion from somewhere. Still think it's a coincidence that 4 billion dollars from the Hydro One sale isn't going to pay down electricity debt the way the Electricity Act says it has to?
But Smitty, I hear you saying, what does this have to do with my healthcare system?
Remember that 5.7 percent increase that we're seeing in the interest on the debt every year? Most healthcare experts agree that population statistics and inflation require healthcare spending increases between 3 and 5 percent every year, just to keep up. The current budget says that healthcare spending will only grow at a rate of 1.9 percent. But federal transfers to Ontario's healthcare system are scheduled to grow at a rate of 6 percent per year until 2018.
So, the federal government is giving Ontario more money for healthcare, but Ontario is spending less on it. It's also selling a bunch of assets to artificially - because remember, you can only sell an asset once and Hydro One actually generates revenue for the government - lower the deficit. How are these things connected.
The only way to get debt interest payments under control is to eliminate the deficit and start lowering the debt. That keeps us from spending the money that we should be spending on healthcare, because it's being used to service the debt.
Ontarians need to remember this year. Because it's the year that deficit spending started costing us services that we care about.