Ford’s mini-budget keeps Wynne fiscal legacy intact

When we were kids, we were wisely told not to judge a book by its cover. Similarly, it’s a mistake to assume you can predict how any government will behave in office based on its political party or campaign promises. In recent Canadian history, there are many examples of free-spending Conservative governments and many examples of fiscally disciplined and tax-cutting Liberal and NDP governments.

That said, the Ford government recently tabled its fall fiscal update, which some have branded a “mini-budget” because it contains several new initiatives. And once again, when it comes to fiscal policy, the Ford government has mostly continued the policies of its predecessor Liberal government led by Kathleen Wynne.

To be fair, Premier Ford’s mini-budget does contain one echo of Ontario’s last long-serving Progressive Conservative premier Mike Harris—namely, a $200 onetime “rebate” cheque to all Ontarians, which is something the Harris government did before its re-election campaign in 2000.

But wherever the era, the rebates are ill-advised—they don’t change economic behaviour and boost economic growth the way permanent tax cuts can. Although it’s important to note that the Harris rebate was part of a much more ambitious tax reduction and reform plan that spurred growth and left more “money in people’s pockets” during a time when the province was balancing its budget after a long string of deficits.

Specifically, the Harris government significantly reduced personal income and business income tax rates, setting the stage for a period of prosperity in the province. By contrast, the Ford government has broken its promises to meaningfully reduce taxes and instead has kept both personal income tax rates and business income tax rates at the same level Premier Wynne left behind. Instead of actually cutting taxes and improving the environment for economic growth and opportunity across all income levels, Premier Ford is relying on his $200 onetime rebate to soften the blow of Ontario’s high taxes.

On spending, Ford has also been much more Wynne-like than Harris-like. According to the mini-budget, per-person spending (adjusted for inflation) is higher today than when Wynne left office. Premier Harris, by contrast, sharply reduced spending.

Moreover, Harris’ spending reductions allowed his government to quickly eliminate the deficit (left by his predecessor Bob Rae) and enact tax cuts—at a time, incidentally, when transfers from the federal government were shrinking.

Fast-forward to the Ford government. Despite maintaining spending at Wynne levels and governing during an era of increasing federal transfers, the Ford government still won’t balance the books this year. The mini-budget pegs this year’s deficit at $6.6 billion. And the Ford government has added a projected $106 billion in debt since taking office in 2018.

Premier Ford acknowledged Mike Harris’ presence at a recent speech to the Empire Club of Canada in Toronto, and his $200 pre-election rebate is a political play drawn directly from the Harris playbook. However, just as it’s a mistake to judge a book by its cover, it's also unwise to judge a government’s approach to policy by its political stripe or pre-election gimmicks. In reality, Premier Ford is not the heir to the Harris legacy of tax reform, balanced budgets and smaller government. Ford’s approach simply represents a continuation of the Wynne government’s high-tax and deficit-fuelled approach to fiscal management that Ontarians have endured for years.