'It’s an old finance minister’s trick. Fix deficit expectations high so that you look good when the real numbers come in.'

For a province that’s supposedly drowning in debt, Doug Ford’s Ontario government seemed to have no trouble throwing around money yesterday.

While bleating about “the extraordinary efforts” that will be needed to reduce Ontario’s $15-billion deficit, Finance Minister Vic Fedeli announced a new low-income tax credit that will give low-wage workers a credit of up to $850 a year. The cost to the treasury will eventually reach $495 million a year.

The new credit is Ford’s effort to compensate low-income voters for his government’s decision to freeze the minimum wage at $14 an hour and not proceed to $15, as promised by the previous Liberal government. But by replacing a higher wage with lower taxes, Ford is effectively increasing the size of the provincial deficit to benefit business owners, who won’t have to pay the higher wages they would normally have to pay their minimum-wage workers.

Nice for small-business owners and workers, but fiscally, not very prudent.

At the other end of the spectrum, the fiscal update has decided not to go ahead with Liberal plans to change personal income tax rates, effectively eliminating a surtax on high-income Ontarians, at a further cost of $275 million to the treasury in 2019.

Then there’s the decision not to follow Ottawa’s lead and phase out access to the small-business tax rate based on how much passive income a company earns. That means Ontario will lose out on $160 million of taxes by 2020-21.

And there are several other tax sweeteners for business.

Thursday’s fiscal update was a strange affair. It had a scattering of tax measures that would usually belong in a budget, and a newish deficit projection for 2018-19, just two months after Fedeli more than doubled this year’s deficit, blaming it all on the Liberals.

There were a few targeted cuts, including eliminating a not-yet-built French language university and cutting three independent legislative officers. Cutting the officers will probably not save more than a few dollars, since the ombudsman and auditor general will pick up the work and, presumably, many of the employees. It was symbolic more than anything else.

As was eliminating the francophone university. But why do that dirty work in a fiscal update rather than do it at the same time the government scrapped three satellite university campuses in a separate announcement last month? By killing the French university in the update, the PCs gave the announcement a heightened profile and made it look as if they were singling out Franco-Ontarians for punishment. A pretty dumb political move.

Then there was a grab-bag of stuff that seemed to have materialized out of nowhere, like extending hours to buy liquor and beer and eliminating rent control on newly built apartments. The 156-page update was chockablock with irrelevant material, such as an announcement about Special Hockey Day, eliminating Discovery Math and building an Afghanistan Veterans Memorial.

As for overall spending, the Ford government seems very reluctant to cut spending on health and education, which account for the lion’s share of public spending in Ontario. Ford still seems to think you can get $6 billion a year from “efficiencies,” and that billions can be cut without cutting any jobs or services.

Examples of the kind of efficiency measures the Ford government is planning are scattered through the document, including — seriously — $11,000 saved from printing fewer copies of the fiscal update, and $14,000 from cutting landlines, faxes, coffee and newspaper subscriptions in the Finance department. So, $25,000 down and another $5.999 billion and change to go.

Then there’s the deficit. In September, Fedeli announced the results of an expert panel that decided the Liberals’ projected deficit of $6.7 billion for this year would really be more than twice as high. They came to that conclusion by accepting the auditor general’s long-standing criticisms of Liberal accounting practices on pensions and hydro-rate subsidies, and the cost of scrapping a series of other Liberal plans.

The magic new number came in at $15 billion. Economists I’ve spoken with say they consider it, in part, a phoney number — set high enough that it won’t be hard for the government to beat it when the final results are in. So far, that analysis seems right. Just two months after the new deficit was projected, Fedeli is now saying he’s going to do $500 million better, in part because of $3.2 billion in vague “expenditure management restrictions,” “ongoing reviews of programs,” etc.

It’s an old finance minister’s trick. Fix deficit expectations high so that you look good when the real numbers come in.

So far, then, the other shoe hasn’t dropped. There’s been a widespread feeling that Ford & Co. would use the higher deficit figures to justify massive cuts throughout the Ontario government, including health care and education.

I’m not so sure anymore. The Ford folks have created expectations that spending on health care will actually increase, with their promises to increase the number of long-term-care beds and to invest heavily in mental health. And their often-elderly voters won’t appreciate longer wait times for hip operations or doctor’s visits.

While Fedeli says they want to reduce the deficit, they’re no longer talking about eliminating red ink in the current mandate, choosing vagueness over specificity. “Our path forward is clear, and that is why it is important to maintain our resolve to pursue fiscal discipline and ultimately restore our books to balance,” Fedeli said.

If the PCs look east to Quebec, they’ll realize that doing the right fiscal thing — controlling spending and balancing the budget, as the Couillard government did — doesn’t necessarily pay off at the ballot box. A fickle public may thank you for your fiscal probity by tossing you out of office.

But if they look south, they may see an alternative, courtesy of their Republican buddies. There, a Republican-controlled Congress and a Trump White House decided to slash taxes and not worry about the spending, with the prospect of a US$1-trillion deficit. Nobody seems too worried, especially on the right.

My guess is that, given the choice between unpopular cuts and a continued deficit that will decline slowly going forward, Ford may discover that deficits and debt aren’t so evil after all.

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