Ontario Progressive Conservative leader Tim Hudak plans to present a budget as soon as possible to immediately stem spending and press ahead with tax cuts if he is elected premier of Canada’s largest province next month.
“There will be an urgent order of business to bring on a mini-budget to get us on a better path,” Hudak said in an interview at Bloomberg’s office in Toronto. “We have to act fast.”
Voters go to the polls June 12 with Ontario facing the largest fiscal deficit of the nation’s 13 provinces and territories and growth that has stagnated at 1.3 percent in each of the past two years. Hudak is vowing spending cuts, government-wage freezes, the reduction of 100,000 public-sector jobs and an end to corporate subsidies. These steps, the 46-year-old claims, would allow Ontario to finance corporate tax cuts, stoke business confidence and spur jobs and growth.
Hudak’s opposition Progressive Conservatives and New Democratic Party triggered the election on May 2 after refusing to support the governing Liberal Party’s budget. The Liberals held a minority of the 107 seats in the province’s legislature, meaning they needed the support of at least one opposition party to continue governing.
The Liberals projected a deficit of C$12.5 billion ($11.6 billion) for the fiscal year that began in April, representing 1.7 percent of the province’s economy, higher than any of its peers, according to Bank of Montreal.
Ontario Premier Kathleen Wynne, who leads the Liberal Party, has characterized the campaign as a choice between austerity and economic growth. Wynne’s approach has been to raise spending growth, financed by increased borrowing and higher taxes, and to put off expenditure restraint until 2015. She’s pledged to return the government’s finances to balance by 2017, one year after Hudak’s plan.
Wynne’s budget raised the province’s projected deficits for the next three years, with program spending increasing 2.6 percent for the fiscal year that began April 1. That followed a 3.7 percent rise the year earlier. Program expenses would be kept largely frozen the following three years, according to the budget.
Hudak, who released his plan earlier this month, would raise program spending by 0.6 percent for the current fiscal year before cutting it 3.4 percent in 2015.
While his projections bring the province to balance only one year before Wynne’s plan, Hudak says the Liberal budget isn’t credible because it doesn’t show how spending will be restrained.
“They simply don’t have a plan to balance the budget,” Hudak said, citing a recent report by Moody’s Investors Service which raised concerns about the province’s finances.
The increase in projected deficits “presents more risk than previously assessed,” Moody’s said in the May 2 statement, which also cited the government’s “relaxed” approached to expenditure control.
Hudak said he’s worried about a potential downgrade of the province’s debt. Ontario has a debt rating of AA- from Standard & Poor’s that is one step above Quebec’s. While both provinces are ranked Aa2 by Moody’s, the credit-rating company said on May 2 that Ontario’s budget was credit negative.
“We’ve had our share of warnings that if we don’t getting spending under control” a ratings downgrade is possible, Hudak said.