Economics: Canada: Ontario budget 2007, some thawts

While both Toronto Mayor David Miller and Ontario's Premier Dalton McGuinty registered their vexations with the new Canadian Federal Budget (which apparently will be passed into law due to the support of its sponsoring party the minority-govt Conservatives plus one of the opposition parties--namely, the separatist Bloc Quebecois (because the Budget is good for Quebec)--nevertheless, McGuinty's Finance Minister Frank Sobara welcomed what Ontario could get and this week introduced a new provincial budget. Kate Howlett reports, "Property tax reform underlined in Ontario budget--Sorbara lays out $91.2-billion fiscal plan with heavy focus on child poverty" (Mar22,2k7).

TORONTO — Ontario Premier Dalton McGuinty's government released a campaign-style budget yesterday that targets homeowner anger over skyrocketing property taxes and child poverty, while reining in spending on most other programs in an effort to inject a dose of prudence into the province's books.

The centrepiece of the Liberal government's fourth and final budget before the Oct. 10 provincial election is new social program spending aimed at giving the 1.3 million children growing up in low-income families a better start in life. The new child benefit program will see $2.1-billion flow to disadvantaged families over the first five years, with the lion's share of the funding earmarked for 2009 and beyond. The program would allow parents to move off welfare rolls without losing financial support for their children.

It's very much worth reading the Howlett article in full. A more critical view is offered by Toronto's Miller. Mayor Miller "... slams Ontario budget--Province refusing to pay its bills and 'upload' social services, mayor says" by Jeff Gray (Mar23,2k7) Globe&Mail.

But, in contrast to the Mayor, I'm isolating the new child benefit program, while noting that the "New Ontario Child Benefit for low-income families [is] worth up to $250 a child this year...." Together with the Fed Budget's provision for each child income-tax-paying parents (middle-class), we see that aggregately families with kids are being helped, small increment by small increment. The Ontario Libs have presented a plan they want written into law with approval of the budget (they have grand majority in the provinicail Legislative Assembly) that would keep adding increatements over 5 years--all so that parents will receive "$1,100 by 2011."

Taken together, the Conservs Fed child-benefits added to Ontario's (and, of course, to child-benefits further enacted by the 10 other provinces) indicates a new demographic awareness: Canada's mainly white population will be having more babies and less abortions due to this promised added support for more kids, which means that future care-givers of the burgeoning, mainly-white, aging population will not experience as extreme a differential in the racial composition of the care-giving workforce. This is important to avoid the extremities of a generalized societal picture where the hugest number of the aged belong to one racial-colour configuration, while the care-givers belong quite visibly to another. I do think that people of other racial/ethnic/colour configurations will also be having more babies and fewer abortions than otherwise would be the case were there no increment at all in the Federal/Ontario model. Of course, I am extending hypothetically that model to the entire country. As the Ontario figure w0uld climb over the next five years to $1,100 a child, so by extension would the Canada-born birthrate climb both in the middleclass and among the poor.

Now, it must be quite aside from the overall demographic implications of the Ontario Lib plan, and also aside from the earlier child-benefit announced by the Conserv govt and targetted to the middleclass in order to compensate for their heavier taxation to pay down the Fed debt, that contrastingly the Ontario Libs have no plan to pay down the provincial debt. A year-old Ontario webpage on fiscal management says. "The province’s total debt is projected to be $154.7 billion as of March 31, 2006. " That debt feature of the Ontario budget 2k7-2k8 does neither Ontario's present kid population nor those to be born under the increased 5-year plan of Child Benefits, any good.

Finally today, there's the quintessential complexity of Canadian political economy centered around tax-revenue-sharing by the Fed govt with the provinces, a mechanism often used by the Feds (Libs especially when in office) to control the terms of various programs actually conducted (in accord with the Fed Constitution) by the various prov govts. These days, the whole question of tax-revenues re-distributed by the Fed treasury to the provinces but unequally (what criterion for provincial "equality"? a province's raw population number?), has come to travel under the term "Fiscal Imbalance." The Conserve budget made an effort to start rectifying the imbalance, but leaders in every province I've heard about this past week, have screamed "not enuff."

Nevertheless, Ontario's Libs had become hugely well-positioned (just days after the Conserv Fed Budget) to use the recent Fed allocations to Ontario as a factor enabling the Lib prov budget with its initial $250 per child plus a 5-yr plan, again, to bring the numbers up to "$1,100 by 2011." The Fed Conservs get some credit for this prov Lib move, as do the Libs of course.

More on the two budgets, later.