Ontario's Liberals delivered a balanced budget a year earlier than expected Thursday, while earmarking billions in spending for low-income families and committing to raise the minimum wage.

'Today, we begin an era of balanced budgets and sustainable surpluses.'

—Finance Minister Greg Sorbara

"We leave behind the deficit that we inherited," Finance Minister Greg Sorbara said to applause in the legislature, referring to the $5.5-billion deficit inherited when the Liberals ousted the Conservatives in 2003.

"Today, we begin an era of balanced budgets and sustainable surpluses."

Sorbara said the government is now on track to post five consecutive surpluses.

The fiscal blueprint — which is the last that will be presented by Premier Dalton McGuinty's government before Ontario voters go to the polls in October — outlined $91.2 billion in spending.

$2.1B for new child benefit

In total, the government is promising to spend more than $32 billion over the next two years to help children of the working poor.

The centrepiece is $2.1 billion to be spent over the next five years to help nearly 1.3 million children in low-income families through the newly created Ontario Child Benefit.

Beginning in July, families with a net income of $20,000 or less will receive a $250 cheque for each child. The annual benefit will rise over the years until it reaches $1,100 by 2011.

The focus on poverty comes after the Liberals lost three urban byelections to the New Democrats following steady criticism over the minimum wage and for clawing back the National Child Benefit Supplement that Ontario gets from Ottawa.

Sorbara said the province's healthy economic state — which the government says will produce a $310-million surplus this fiscal year and surpluses up to 2010 — let the Liberals turn their focus to child poverty.

"The Ontario Child Benefit is a marvellous transformation of the way in which we support low-income families. In short, it takes children off welfare," Sorbara said.

The province also promised to phase out the clawback on the National Child Benefit Supplement by the end of 2011.

Currently, for example, the province claws back $120 a month from a single parent who is on social assistance and has one child.

Jacquie Maund, the co-ordinator of the Family Service Association of Toronto, told CBC News that it was "disappointing" it wasn't going to happen sooner.

Millions for child care, housing

An extra $25 million is earmarked to improve child care this fiscal year, with the funds doubling in 2008-2009.

Elizabeth Ablett, the executive director of the Ontario Coalition for Better Childcare, said it fell short of the $300 million promised back in 2003 — but added it was "a small step in the right direction."

The government also plans to establish a College of Early Childhood Educators, in hopes of ensuring high standards of quality throughout the child-care system.

The budget uses some federal affordable housing cash to create a new $185-million housing allowance for low-income families with children.

Ontarians who receive disabled or welfare benefits are also getting a raise — payments will go up by two per cent although many were asking for a 10-per-cent increase.

After a sustained campaign by the NDP to immediately raise the minimum wage from $8 an hour to $10, Sorbara said the province will phase in three increases starting in March 2008 that will bring the hourly rate up to $10.25.

It will jump by 75-cent increments in each of the next three years.

Toronto left empty-handed

For the second time this week, Toronto was largely overlooked by government budgets — first by the federal spending plan released Monday and now the province.

Toronto Mayor David Miller said he was disappointed that Ontario didn't take back responsibility for paying for some programs that had earlier been downloaded to municipalities — such as as the prescription drug plan, social housing and public health.

"They do have a surplus. They've got room to pay their bills. All we're asking is that they pay their bills. And if I sound frustrated, it's because I am," said Miller, is launching the city's budget on Monday.

Businesses, homeowners get tax cuts

While the focus was clearly on poverty, overtures were made to small business and homeowners.

Business owners will see a $540-million cut to the business education tax rate over the next seven years, reducing rates in 321 municipalities.

Homeowners will see changes to the property tax assessment system, including a move to a four-year reassessment cycle.

The Liberals also vowed to accelerate the elimination of the capital tax, from 2012 to 2010.

Not an election blueprint, Sorbara insists

Although political observers have said the budget was about taking away the NDP's ammunition on social policy, Sorbara denied that it was an election blueprint.

"With this budget, we have finally had the opportunity to address the social deficit," he said. "This budget is not about the election campaign."

Among those who made relatively little gain in Thursday's budget:

• The province didn't top up its projected spending for post-secondary education despite extra cash coming from the federal government.
• After being virtually shut out of the federal budget, aboriginals didn't command a high profile in the Ontario budget either, aside from receiving $80 million for off-reserve housing.
• Ontario's struggling manufacturing sector received no new financial aid but got an Ontario Manufacturing Council that will update the government about the state of the sector.

With files from the Canadian Press