The Ontario Budget

Helen Burstyn, Chair, The Ontario Trillium Foundation, and Director, The Canadian Club of Toronto; Hilary Short, President and CEO, The Ontario Hospital Association; His Worship Mayor David Miller; Scott Hand, Chair and CEO, Inco Ltd., and Director, The Canadian Club of Toronto; The Hon. Marie Bountrogianni, Minister of Intergovernmental Affairs and Minister for Democratic Renewal, Government of Ontario; Renato Discenza, Senior Vice-President, Enterprise Sales, Bell Canada; Robert J. Prichard, President and CEO, Torstar Corporation; Lisa Baiton, Vice-President, Government Relations, Environics Research Group, and Director, The Empire Club of Canada; Mark Cohon, President and CEO, Audience View Software, and Chair, The Ontario Science Centre; Dr. Janice Gross-Stein, Director, The Munk Centre for International Studies, University of Toronto; Stephen Motta, President, GE Money Canada; and William Whittaker, President, The Empire Club of Canada, and Partner, Lette Whittaker LLP.

Introduction by Rod Phillips

On behalf of the Canadian Club of Toronto and the Empire Club of Canada, it is my pleasure to welcome Premier Dalton McGuinty to our podium today.

Since his party's election in 2003 Premier McGuinty has been a passionate and articulate proponent on the interests of our province's diverse and growing population.

Now we all know that leading a complex province like Ontario requires world-class diplomatic skills. Premier McGuinty has shown great ability in this regard which is a very good thing. Especially given that so many highly qualified politicians are considering running for the federal Liberal leadership later this year he may have to choose between his Education Minister and his brother.

Dalton McGuinty was born and raised in Ottawa in a family of 10 children, which probably stands him in pretty good stead on those days when cabinet meetings get a little rowdy.

His mother, Elizabeth, is a retired nurse living in Ottawa. His father, Dalton Sr., was a teacher and professor who served as the Ottawa South MPP until 1990.

Before entering politics, Dalton McGuinty practised law in Ottawa. He has a law degree from the University of Ottawa and a science degree from McMaster University in Hamilton.

He met his wife Terri, an elementary school teacher, when they were both still high school students in Ottawa. They have been married 25 years and have four children

He was first elected to the Ontario legislature in 1990, winning the seat formerly held by his father in Ottawa South. During his years in opposition, he served not only as leader but as a critic for energy, colleges and universities, native affairs and the environment.

In the general election of 2003, the Ontario Liberal Party formed the government, taking 72 seats with 47 per cent of the vote, and Dalton McGuinty became Ontario's 24th premier.

Last week, his government introduced its third budget, one that focuses on health care, education and in particular infrastructure--roads and bridges, as well as public transit--issues of great interest to those of us who live and work in the GTA.

Premier McGuinty has spent much of the past year demanding that the federal government--first Paul Martin's and now Stephen Harper's--do something to address the imbalance between what we as Ontario contribute to the country and what we receive.

Premier McGuinty is now more than halfway through his first mandate. He is here today to tell us how he thinks things have been going, and where he expects them to go in the future.

Ladies and gentlemen, please welcome to our podium today the Premier of this great province of Ontario, the Honourable Dalton McGuinty

Dalton McGuinty

The highlight of this time of year for many of us at Queen's Park is the budget. I'm enormously proud of our budget because it builds opportunity for Ontarians.

We believe that our taxes must be fair and competitive, so there are no new taxes or tax increases.

We want to encourage business investment. So there is a 5-per-cent cut in the capital tax starting January 1, 2007--a full two years earlier than we planned.

We know that, if we are to compete and prosper, our people must be healthy and vibrant. So, there is an additional $1.9-billion investment in health care. This is so we can continue to reduce wait times, increase access to doctors and nurses and aggressively pursue illness prevention. I'm also very pleased that our budget proposes to fund insulin pumps for about 6,500 children living with Type 1 diabetes. This would make us Canada's first province to fund insulin pumps.

We know the best jobs will go to the place with the best-educated, most highly skilled work force. That's why we're doubling student aid and increasing funding for universities and colleges by another $700 million this year. This will ensure the 75,000 in our postsecondary system spaces in high-quality institutions. And we are also increasing investment in our primary and secondary schools by another $400 million this year, so we can continue to reduce class sizes, improve student achievement and lower the drop-out rate.

Finally, and this is really exciting stuff, we are dramatically improving Ontario's transportation infrastructure. There is $1.2 billion for roads, bridges and public transit. This includes a new subway line that will, for the first time, link 416 and 905--the city of Toronto our largest economic engine, and York, our fastest-growing region.

For years, audiences like this one, often in this very ballroom, have heard about and talked about the need to repair our crumbling infrastructure and invest in our transportation networks. You have told us that this is absolutely essential if Toronto, Ontario and Canada are going to take on the world--and win. Well, I'm delighted that, under our plan, this important work, this essential work, is finally getting done.

There has been some healthy debate since the budget, as there should be.

Some have suggested we should have instead cut taxes or made even larger expenditures that would continue year after year.

The fact is that--thanks to you and other hard-working Ontarians like you--we have some additional revenues this year. These were revenues we did not anticipate and private-sector forecasts did not anticipate. And, since they were a surprise--a pleasant surprise--the prudent thing to do was to treat them as one-time revenues, instead of counting on them being there year after year. So we used these one-time revenues to make some one-time investments in much-needed infrastructure.

Others have suggested we should have foregone these investments and balanced the budget this year. We made a strategic choice--the same choice Ontarians would make in their own lives.

You wouldn't pay off your mortgage if your house foundation needed repair, or your plumbing was falling apart. So we chose to renew Ontario's infrastructure, at this point in time.

And we remain on track to balance the budget no later than 2008-2009. We'll balance one year earlier--that is, next year if our $1 billion reserve isn't needed.

I'm confident we are making the right choices. But this debate does raise a legitimate question: when Ontarians are working so hard, when Ontarians are working so well, when our economy is performing at such a high level, why does Ontario face this choice at all?

We should be able to balance the budget and make strategic investments at the same time. We are generating enough wealth here in Ontario to do both.

But two obstacles stand in our way.

The first is the fact we inherited more than just a $5.5-billion fiscal deficit. We also inherited an education and skills deficit, a health-care deficit and the infrastructure deficit--and we are addressing them all, in addition to the fiscal deficit.

The second obstacle is the enormous gap between what hard-working Ontarians contribute to the federal government as revenue and what they get back in programs and services. And this is what I want to talk about in my remaining time today.

I'm going to tell you where things stand--and where Ontario stands--when it comes to addressing this gap that faces our province. And I'll talk about where we stand when it comes to addressing the fiscal imbalance that faces every province including Ontario.

Like our weather, this discussion is finally heating up. A panel set up by the provinces is preparing a report. I want to publicly thank Janice Stein for her tremendous contribution as Ontario's representative and co-chair of the panel. I want people to note that there wasn't a single grey hair on Janice's head before she began her work on the fiscal imbalance. Janice has learned, as I have, that discussions over money with our provincial colleagues require lots of goodwill, a sharp pencil and sharp elbows.

A federal panel will be reporting shortly. We premiers will meet next month in Montreal. And odds are that we will sit down with the Prime Minister, probably in the fall.

Now I know that, when it comes to TV ratings, federal-provincial talks are no threat to Canadian Idol. But it's as important as your child's school, your parents' health care, the quality of higher education and the safety and capacity of our roads.

What's at stake is our ability--Ontario's ability--to invest in these things and put the province on a sound financial footing--not occasionally, but permanently. So I want to spell out the principles that will guide Ontario as we seek that progress.

First, just a bit of context.

When I started campaigning to narrow Ontario's gap in 2004, that gap was $23 billion. Thanks to the support so many of you gave in that campaign, we have made real progress. We negotiated breakthrough agreements, on Ontario's behalf, with former Prime Minister Martin's government. Those new agreements are designed to invest another $6.9 billion over the next six years in Ontario--in support for our immigrants, in training for our workers and in measures to offset the effects of climate change.

That's real progress.

Now, there are those who would say, "Okay McGuinty, that's good enough, now be quiet, let's just drop the subject."

But before anybody declares victory, before they schedule the parade, they need to consider this: Just 10 years ago, the gap was $2 billion. Today our gap remains many times greater than $2 billion.

Here in 2006, with Ontarians working so hard, and generating so much wealth, we still had to choose between the investments we all agree need to be made and balancing our budget.

So, if we can make this kind of progress under Mr. Martin, who never acknowledged a fiscal imbalance between the federal government and the provinces even existed, then surely Ontario is entitled to expect tremendous progress under Prime Minister Harper, who said that fixing the fiscal imbalance is one of his highest priorities.

Now, here are the principles that will guide Ontario as we seek that progress.

First of all, there has to be enough money in place to meet the real needs of Ontarians today. Our fiscal arrangements were designed decades ago--for an agrarian society, a protected market and the old economy. We need a new approach that recognizes the growing importance of our cities and their fiscal challenges, the reality of free trade, and the demands of a new knowledge-based, global economy. A good first step would be to restore federal transfers to the level they were at before the deep cuts of the 1995 federal budget.

Secondly, the fiscal imbalance must be corrected. Right now, the federal government has most of the money while we provinces have most of the responsibilities, including the two that matter the most and grow the fastest--education and health care.

There is only one level of government that has far more revenue than responsibilities in Canada right now. It's not my level and it's not city hall unless Mayor Miller knows something I don't. A strong central government should set goals and objectives we can all work towards. But those doing the work need the resources to get the job done.

The third principle is transparency. The system we have now is the product of side deals, add-ons and backroom wheeling and dealing.

Programs that should treat each Canadian equally no longer do.

Programs that should be funded on a per-capita basis no longer are.

An Ontarian who finds himself out of work is no less a Canadian than an unemployed person in New Brunswick. But an unemployed Ontarian gets $3,310 less in regular benefits than an unemployed person in other provinces.

An Ontarian with a bad hip is no less a Canadian than someone in Quebec with a bad hip. Yet Ontario gets $181 less per hip replacement than other provinces.

A college student in Ontario is no less a Canadian than her counterpart in PEI. Yet Ontario receives $104 less per college student than other provinces.

A disabled Ontarian is no less a Canadian than a disabled person in Manitoba. And yet Ontario receives $361 less per disability-support case than other provinces.

The system must be transparent. Programs like these must be delivered on a strictly per-capita basis--that a Canadian is a Canadian is a Canadian!

Let me be clear.

We support equalization.

We acknowledge that different provinces and territories will have different financial capacities.

We are proud to help pay for training in Halifax and St. John's, surgeries in Montreal and Winnipeg and postsecondary education in Whitehorse and Moncton.

But the way for Ontarians to support these services for Canadians in equalization-receiving provinces is through one, transparent equalization program. We do not support the unfairness that has crept into all other federal transfers--transfers that are supposed to be paid out on a per-capita basis.

Which brings me to our fourth principle--and the most important one of all. And that's fairness.

We support equalization because we want all Canadians, wherever they live, to be able to depend on their public services. But it would be a mistake for Prime Minister Harper to solve the fiscal imbalance through equalization alone.

That would help some provinces--but not all. And it would help some Canadians--but badly fail others. And it would fail Ontarians most of all.

Any proposed solution to the fiscal imbalance must go beyond equalization alone and include transfers to all Canadians.

We still need to narrow Ontario's gap. We're not looking to eliminate it. We know we have a leadership role to play within Confederation. But we do need to continue to narrow the gap so we can invest in our future prosperity and put our province on a sound fiscal footing, and not just when there's a windfall, but year after year after year.

After all, if Ontarians are to share the wealth, we must first equip them to generate it. And that means strengthening their education and skills, their health and their infrastructure.

We Ontarians believe in Canada. We are proudly Canadian.

Sometimes, in their quest for simplicity, reporters ask me: "Do you put Ontario first or Canada first?" They might as well ask me if I put my oldest daughter first--or my family first.

The truth is I want a strong Ontario for a strong Canada.

As premier, I am privileged to work on behalf of 12.5 million Ontarians. I will always stand up for my province. I can't think of a better way of serving my country than by strengthening my province. And I can't think of a better way of strengthening my province than by ensuring every Ontarian has the opportunity to succeed.

That's what our budget is all about, that's what our campaign to narrow the gap is all about and that's what I'm all about.

Building a strong Ontario by building opportunity.

Building a strong Ontario for a strong Canada.

Thank you.

The appreciation of the meeting was expressed by William Whittaker, President, The Empire Club of Canada, and Partner, Lette Whittaker LLP.

Members and guests of the Canadian Club of Toronto and the Empire Club of Canada, I have the honour to express your formal thanks to Premier McGuinty.

The topic of fiscal imbalance is now more than a cottage industry in Canada with many of our provincial governments and think tanks weighing in on this topic over the past few years. Google the phrase "fiscal imbalance" and it is truly amazing what pops up, most of the entries being Canadian in origin.

The Ontario government has been at a disadvantage in this fiscal imbalance debate as most Ontario residents consider themselves Canadians first and Ontarians second. This has made it difficult for Ontario politicians to discuss unfairness in fiscal matters without being considered disloyal to this ethereal concept--Canada. Ontarians forget that their Ontario government looms large in their personal lives in terms of delivery of health care, social services and transportation and infrastructure.

Through speeches such as yours today Mr. Premier, the topic of Ontario's fiscal imbalance is finally being heard by our fellow Canadians and hopefully our newly elected federal government. Your use of per-capita statistics on how Ontario lags behind the rest of Canada, respecting federally funded health procedures and post-secondary education--a technique used to great effect by your Minister of Intergovernmental Affairs in recent speeches and media interviews on this topic--were compelling.

Your remarks were rational, well thought out and lacked the histrionics of some other commentators on this topic; indeed remarks one would expect from the premier of the province that is the cornerstone of Canada.

Mr. Premier, I thank you for your remarks today.