Ontario budget draws mixed reviews

Reaction to Ontario's latest budget has been mixed — some call the cuts too severe, while others say it does not cut deep enough.

Following are some comments, from business, political and health interests, about the budget released Tuesday by Finance Minister Dwight Duncan:

Tim Hudak, leader, Ontario Progressive Conservatives:

“This is the time for tough and responsible fiscal management. Yet today’s budget is a weak and disappointing response to Ontario’s jobs and spending crisis. In fact, it actually puts up roadblocks to the very economic growth its assumptions are pinned on... At just the time we need to be making Ontario more competitive and restoring business confidence to create jobs, [Premier] Dalton McGuinty is taking $1.5 billion out of the economy over the next three years to pay for his overspending."

Andrea Horwath, leader, Ontario New Democrats:

"For families worried about their jobs, their health and the growing cost of living this budget falls short. We’re going to be listening to the everyday people who will be affected by the budget and we’ll be putting their interests first in the days ahead. We’re committed to making this minority government work as long as it provides results for people....The government seems to be finally admitting that no-strings-attached corporate tax giveaways aren’t creating jobs. Unfortunately, the province has already blown billions on these handouts and plans to do more as soon as we have the money.”

Michael Gregory, senior economist, and Robert Kavcic, economist, BMO Capital Markets:

"Finance Minister Duncan said 'for the third year in a row, we have beaten deficit forecasts,' but for the third year in a row, the extended deficit-reduction path has not changed. While the static path to a balanced budget by 2017/2018 is now more credible owing to realistic revenue growth assumptions and a detailed spending restraint plan, serious challenges remain. Among these are push-back from public-sector unions, the political reality of managing a minority government and the always-present demographic pressures on health-care spending. Last year, we said the province was on 'a slow boat to balance.' Today, it’s clear they’re still on the same slow boat, but they now have charts and a compass."

Robert Hogue, senior economist, RBC Economics:

"This was supposed to be the Big One. Ontario’s budget 2012 was built up as one of the toughest budget exercises in the province’s history that would provide the answers to many questions left hanging in the previous two budgets. And, budget 2012 went some way toward addressing the most important question: ‘How will the Ontario government balance its books by 2017/2018?’ But its focus on the next three years stopped it short of offering a complete answer."

Matthew Stewart and Ksenia Bushmeneva, Conference Board of Canada:

"The 2012 Ontario budget sets Ontario’s public sector on a long-term path to frugality. Over the next six years, a program of fiscal austerity will see growth in total program spending average well below one per cent per year. The combination of expenditure and revenue measures places the government on a path to balance its books by 2017–18. But containing costs over such a long-term horizon will be difficult."

Plamen Petkov, Ontario director, Canadian Federation of Independent Business:

"After years of consistent lobbying, the CFIB is pleased that the government has acknowledged the main challenge facing Ontario’s budget is salaries, pensions and the size of the broader public service. The government should be credited with presenting a tough plan to cap program spending increases at one per cent and limit the spiralling costs of public-sector pensions. However, much of this plan depends on public-sector unions putting water in their wine, and accepting restraint in wages, positions and pensions. We’ve seen no evidence that unions will agree to any change regardless of how dire the state of Ontario’s finances.”

Dr. Stewart Kennedy, president, Ontario Medical Association:

"The Ontario Medical Association has reviewed the provincial budget documents and has some serious concerns about the government’s ability to appropriately care for our aging and growing population. The government commits in the budget to improving access to doctors and same-day services, but the budget proposes to put a cap on the budget that pays for those things for the next fiscal year."

Warren (Smokey) Thomas, president, Ontario Public Service Employees Union:

"The 2012 Budget has failed Ontario on several counts. If this Budget passes, it will hurt people, slow our economy, and sharply increase income inequality in this province."

"It is worth noting that Finance Minister Dwight Duncan has overestimated the provincial deficit every year since the recession began… Clearly, the Minister has worked hard to keep deficit estimates frightening so that the final real result is cheerful. What this means, in simple terms, is that the Minister’s numbers can’t be trusted."

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8 things to watch for in today's federal budget

While Prime Minister Stephen Harper has made a habit of avoiding pre-budget leaks, he and his cabinet have made a point of telegraphing what to expect. Their mantra — and what they believe is a key part of their success — is that they tell voters what they'll do and then they do it.

With an estimated deficit of $33.3 billion and a promise from the government to balance the budget by 2014, here are eight elements to watch for in today's budget.

Harper lit a firestorm in a speech he gave in front of an audience of international business leaders in Davos, Switzerland, in January when he said the Canadian government would be looking at making Canada's retirement income system sustainable. His staff were prepared with Finance Department numbers showing a bulge in costs as baby boomers hit age 65. Finance Minister Jim Flaherty is expected to use the budget to outline changes to OAS, possibly by raising the eligibility to 67 instead of 65, but the actual change won't come until several years after this budget.

Harper also said in Davos that Canada has to change the way it invests in research and development. The government says Canada is one of the world's most generous with R&D funding, spending almost $12 billion a year, but the private sector isn't delivering results to match that investment. Minister of State for Science and Technology Gary Goodyear says the National Research Council, which now gets $700 million a year, could see major changes. A report last fall by business leader Tom Jenkins also said the complicated SRED tax credit system needs to be streamlined to make it easier to apply for funding.

Watch to see how much the defence budget is cut with the Conservatives having sold themselves as the party that cares about the military. The government has increased the department's annual budget by $6 billion a year from the time it took office in 2006, so it is a department seen as having room to cut. It's likely immediate cuts will be on the staffing side and to the number of full-time reservists. Plus, with most soldiers back from Afghanistan and the mission in Libya over, there will be fewer operational costs on the books.

The government has been shifting where it spends its money on diplomacy over the past six years, closing some embassies and opening new trade offices, so watch to see whether any missions will be closed. And the Canadian International Development Agency, which operates independently from Foreign Affairs but doesn't have separate enacting legislation, has been a target for a government trying to make aid more effective. There's a chance it will get wrapped into the Department of Foreign Affairs, but more likely spending will be cut from other budgets, like staff travel to projects they're overseeing in developing countries.

Treasury Board president Tony Clement, who's like the government's chief operating officer, says the Conservatives won't break any collective agreements with public service unions, and he's hoping a lot of the jobs the government cuts will be through attrition or moving around civil servants who want to stay in the bureaucracy. But Harper has said public service pensions aren't sustainable at their current levels, and public service workers will be expected to shoulder a greater burden of their retirement costs.

The Assembly of First Nations has said it needs $500 million in the budget to bring on-reserve schools up to the same standards as other Canadian schools. And after weeks-long controversy over the state of housing in Attawapiskat, followed by a gathering in Ottawa to "re-set" the relationship between the Crown and First Nations, expectations will be high.

Immigration Minister Jason Kenney has been tailoring his announcements to the business community lately, extolling the changes he's made to the immigration system that make it easier to hire skilled foreign workers to fill labour gaps. This has little to do with the federal budget, but Kenney will be on-hand to sell it as good for the Canadian economy.

The Conservatives have promised not to cut transfers to the provinces, including health funding. While the current funding agreement doesn’t expire until 2014, Flaherty shocked the provincial and territorial finance ministers when he gave them the take-it-or-leave-it details of the new agreement in December 2011: health funding will continue to increase by six per cent a year until 2017. Starting in 2017, funding will be tied to nominal GDP, although the federal government is guaranteeing a minimum increase of three per cent. Nominal GDP is the monetary value of all goods and services produced within the country annually, including inflation.

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