What can we expect and what can it mean?

A guide to Dalton McGuinty's first budget
May 14, 2004

TORONTO--The McGuinty Liberals campaigned on promises to reinvest in public services, balance the budget, and to not raise taxes. With the Liberals' first provincial budget set to be released on Tuesday, the question is no longer how it will deliver on their promises but in what manner and to what extent it will fall short.

"What's next? A guide to Dalton McGuinty's first budget," by economist Hugh Mackenzie reviews the key choices open to the government in each of the three components of the budget--revenue; expenditures; and deficit--and evaluates the spin put on each as the pre-budget debate has proceeded.

The government has promised a substantial increase in program spending at a time when the province's fiscal capacity falls short of what is needed to pay for current program spending. While there is no consensus within government on how to deal with the fiscal crunch, politically, the audience for cutting our way to fiscal balance appears to be dramatically smaller than it was in the mid-1990s.

"Tuesday's budget will be the first real indication of where the government's priorities lie," says Mackenzie.

The study states that if program and capital spending is below $67.5 billion, that will be an indication that the spending cutters have the upper hand. Anything less than $500 million in revenue base enhancement measures will represent a victory for the no tax increase side of the government's internal debate. Finally, a deficit of less than $2.5 billion will suggest an acceptance of the status quo--one that is currently inadequate for most Ontarians.

For more information:
Kerri-Anne Finn 613-563-1341 x306