Toronto

Ford government urged to tackle deficit, but not necessarily by slashing spending

As the Ford government prepares to table its first budget next Thursday, it's getting a wide range of suggestions for how to reduce its $13.5 billion deficit.

Both the Ontario Chamber of Commerce and a left-leaning think tank warn against deep cuts

Finance Minister Vic Fedeli will deliver the Ford government's first budget on April 11. (Christopher Katsarov/The Canadian Press)

Premier Doug Ford's government is getting a wide range of suggestions for how to reduce its $13.5 billion deficit, as it prepares to table its first budget next week. 

There's some common ground on this issue in two documents coming from different spots on the political spectrum.

The left-leaning Canadian Centre for Policy Alternatives (CCPA) is telling Ford's PCs that they have options beyond making deep spending cuts. 

"It's possible to maintain and enhance public services while decreasing the deficit and the debt-to-GDP ratio, so long as Ontario begins to address its longstanding revenue problem," CCPA economist Sheila Block and researcher Ricardo Tranjan write in a report published Friday.

The authors question whether Ontario truly is in a "big, scary financial crisis that must be addressed at any and all costs."

Sheila Block, a senior economist with the Ontario office of the Canadian Centre for Policy Alternatives, says the Ford government can preserve and actually expand public services, while reducing the deficit, by increasing revenue. (Lauren Pelley/CBC News)

Meanwhile, the pro-business Ontario Chamber of Commerce is also cautioning Finance Minister Vic Fedeli against making indiscriminately deep spending cuts in his April 11 budget.

The provincial government already has "relatively low per-capita expenditures on health care, education, and social protection," writes economic analyst Reid McKay in the chamber's report entitled Accounting For Ontario's Debt, published Thursday.

"Spending cuts must be done with the full understanding of the economic consequences," McKay writes. "Investments in areas such as transit and transportation, broadband internet, health care, skills and education, and trade promotion will help grow the economy and allow businesses to flourish."

While the two reports acknowledge that the deficit should be reined in, they differ on how to go about it. 

Ford's PCs are "using financial fearmongering as a cover for an agenda to reduce the role of government," the CCPA report says. The paper suggests the government could move toward balancing the budget by raising corporate taxes and boosting what the wealthiest Ontarians pay in income tax.

The Frost Building, home to Ontario's Ministry of Finance. (Mike Crawley/CBC)

The government "can preserve and actually expand public services while reducing the deficit," Block said in an interview Thursday. "To do so it needs to increase revenues." 

However, the Ford government is giving absolutely no sign it's considering any such tax increases. The PCs campaigned to do just the opposite.

The Ontario Chamber of Commerce report rejects tax increases as a way to balance the budget and start paying down the province's $348-billion debt.

"Every tax dollar levied imposes a larger, negative impact on the economy," says the chamber report. "Raising taxes or implementing austerity measures to reduce Ontario's debt burden may, therefore, have the unintended effect of squandering current opportunity to grow Ontario's economy." 

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