Host: Budgets are financial documents and they're obviously political ones too. So how healthy are our finances as we head into a period of greater economic uncertainty? And what does this budget tell us about the government's priorities? Ricardo Tranjan is Ontario research director at the Canadian Centre for Policy Alternatives. Rosalie Wanst is associate director of research at the C.D. Howe Institute. Great to have you both in our studios. How are you doing?

Ricardo Tranjan: Great. It's always an exciting day on budget day.

Host: Budget day.

Ricardo Tranjan: Absolutely.

Host: All right. So I'm going to start with you. The government is embracing deficits for another year. It's $2.3 billion higher for 25/26 increases to 6,000,000,000 in 26/27. Kicking a balanced budget down the line a little bit further. Help us understand what's pushing the spending a little higher in this budget.

Ricardo Tranjan: There's not that much spending pushing the deficit. Yes, we're trying to keep up with inflation pressure. We're trying to keep up with population growth on some files. Mostly we're not not in the key ones anyway. Not in health, not in education, not in community and social services, but a lot of the problem that we have right now is that we have not been able to increase our fiscal capacity. We're not being able to increase how much we generate in taxes, revenues, so that we can not just keep up with the pressures that we have right now to maintain the services, but ideally to improve the services that we're providing to Ontarians as well.

Host: Rosalie.

Rosalie Wanst: Well, I'd mostly agree with that, that there wasn't a ton of new spending in the budget, but that the government has committed to a balanced fiscal path, and the deficit is lower than it was projected to be last year. So they are clearly committed, committed to that. And really, I think that it's about the economic challenge and maintaining possibly some fiscal fire power for some non-budgetary emergency response things that may or may not happen over the next year. So I think that they're sort of going for a prudent middle ground. But the fact that the deficit is lower than it was.

Host: What do you mean by that? Help us explain that. What do you mean.

Rosalie Wanst: By that? Sorry. Yeah. In the fall economic statement or in budget 2024, the budget was projected to be bigger in this coming year than it was. And as you said, we've kicked that deficit is going to grow a little bit further into the future, but they're more or less continuing on the same fiscal path that they were before. But it looks a little bit better. With that being said, that means that maybe they could have put some of that money into program spending. But I think given the uncertainty of the global and economic situation, it's probably best to keep your powder dry.

Host: Okay, let's talk affordability. Ricardo, was there any measures in the budget that were targeting affordability that you saw?

Ricardo Tranjan: Mostly we haven't seen anything that would make a substantive impact for families. Yes. There are macroeconomic factors that are constantly changed. Yes, uncertainty has become the new normal. But for a lot of families, for a lot of Ontario families, the crisis is already here. For people trying to have access to a family doctor, for kids in classes that are completely oversized with 30, 35 kids, for people relying on social assistance rates that have been frozen since 2018, for people trying to pay rent, the crisis is already here. So the moment to invest was now. Actually, it was a few years ago, but now we do and we haven't seen that. So from an affordability perspective, there is very little, if anything, in this budget.

Host: Rosalie, was there anything in the budget that would help Ontarians who were struggling with the higher cost of living? Right now?

Rosalie Wanst: I think it's one of those things that involves so many different aspects of life that it is difficult to have, say, a single budget item or program that would drastically affect affordability. But I do think that, you know, expanding some tax relief on new home purchases is a specific one just around affordability. Housing has been a major concern for people. And I would also say that part of the affordability challenge right now is around just the spike in oil prices, making everything more expensive. And so I would maybe say that the tax relief for small businesses actually will really help the businesses that are the most likely to be disrupted and have the hardest time managing trade disruption. And then also if that if we get strong growth in the small business sector, then hopefully that will generate those government revenues that can help us get a little ahead of this curve.

Host: Okay, well, you bring up housing, so let's talk about it. HST break for buyers of new homes. Does this move the needle in terms of stocking demand potentially more construction?

Ricardo Tranjan: I cannot think of the least effective way to improve housing security. Why do you say that right now? Because we're spending 1.4 billion to provide a tax rebate to folks buying newly built homes. And it can be anyone. It can be your first house, it can be your second house, it can be your 10th house. If you are an investor as the Prime Minister, as the Premier emphasized yesterday, the provincial government has the authority over tenancy regulation. It has authority over social housing. If we were to focus on those two areas, we could do a lot. With $1.4 million, we could build a significant number of social housing. With $0, we could tighten rent controls and improve affordability for a third of Ontarians. The rent. And yet we're not doing that. We're providing a tax base that likely will fail on its own alleged goal, which is to improve supply. The previous measure, very similar measure, didn't achieve that goal, and we are not sure that even achieved its stated goal. It's an awful, awful policy in housing. I studied a lot of housing. This is not housing policy. This is simply corporate welfare.

Host: Rosalie. I want your take on that. We're talking about 8000 homes, I believe is what the number was in terms of what that HST break would allow for. But what are your thoughts on that?

Rosalie Wanst: Well, and whether it's actually 8000, I think it is doubling down on their previous policy. And it is intended to stimulate new builds more than it is really around housing affordability. So if it's going to be effective around the total supply of housing, then that will take some years to show up. But also those that are currently going to planning to buy a new house. It is, it is, it will make it more affordable for them. Whether they needed that affordability break or not, it does make it cheaper.

Host: Okay, let's move over to small business. As you were talking earlier, Ontario plans to cut the tax rate for small business to 2.2% from 3.2% on par with. If we look at other provinces across the country, how significant is that to a small business? What does that look like? Are they would this help them hire new staff, expand?

Ricardo Tranjan: I think that one of the main things that you see across all small businesses and the surveys across provinces is that they're continually cash poor, as in they're strapped for additional resources. And so giving them some tax relief, particularly when their costs are increasing in ways that they can't manage the same way that big businesses do. Here, I'm talking about trade policy and reorienting supply chains and similar things. I think relief for small businesses, what they will spend that on will be investing in their businesses and keeping them afloat. Hopefully, they'll be able to grow and expand and hire new people, but it will help if they're facing tough times to make sure that they don't have to reduce their business or reduce their staff, and particularly because they're extra vulnerable. I think that this relief in this economic situation is a good move.

Host: All right. Ricardo, your take on the small business tax.

Ricardo Tranjan: I don't have much to add, but I agree that if we're going to have a tax break, that is probably one of the best ways to put it.

Host: All right. Let's talk about what takes up the biggest chunk of the budget. Let's talk health care. Specifically. The government is doubling spending for home and community care to 2.2 billion over three years. What do Ontarians get for that investment, Ricardo?

Ricardo Tranjan: The sector is desperately in need of more funding. Right? So every new funding that comes will make a positive impact and is much welcomed. Could it be this this particular sector could be other aspects of the health care? My main concern here is that when you adjust the current figures for inflation, for population growth and for aging, which is really important in health, we have only a 0.5% increase in the real allocation this year, and that drops next year. Next year, we have a 1.6% cut in real health spending as forecasted right now. So we're not investing nearly enough. And the second piece of this, it also matters where this funding is going. We have seen with this government and my institute has has documented this well, we are starting to pay more and more for or subsidize in different ways for profit care. And that's a slippery slope. And we know that funding private care won't buy us as much health in return.

Host: Rosalie.

Rosalie Wanst: I would fully agree that the home care sector in Ontario is in need of resources. It's very obvious that there are unmet needs and also that if we could increase home care services, we could likely delay people requiring LTC. You could prevent, you can prevent some unnecessary hospitalizations. And so it really if there's a place in the health care sector that can have really positive benefits further along the care continuum, that investing in home care is absolutely a good place to do it and that we we still have an aging population. So I would agree that it going back down is actually more of a concern. But the investment this year is, is welcome. And I would say we can we should likely continue to expand in that space, particularly because that population and that need continues to expand. And last I checked, the long term care wait list hadn't gone below 40,000 in at least a year. And so really there is quite a lot of need. And so will this be enough to fully address that? Likely, no. But it's a step in the right direction.

Host: All right. Let's stay in health care. The government says there will be 64 billion over the next ten years for health care infrastructure. That includes about 50 hospitals to increase their beds. Is that the right move, considering that if you've followed the headlines in Ontario, you know that a lot of hospitals are struggling to stay afloat, many are shedding staff. Is that the right move, Rosalie?

Rosalie Wanst: Well, I would say that it matters more what kind of beds they are, because there is the risk that we have high volumes of alternate level of care patients. Those are patients that could be better cared for in long term care in the community, but they're in hospital beds. And depending on the hospital, those rates could be 10%. Up to 40% of the beds are currently occupied by those types of patients. So more beds can be beneficial, but not if it's really just to warehouse ALC patients where it's expensive and they could get better care. But that being said, most hospitals or quite a few hospitals in Ontario are in a deficit position and are in need of infrastructure upgrades, some additional flexibility so that they can manage those staff shortages. And so spending money in our hospitals is very much also needed.

Host: Right. I'll get your take on this, but I want to add the Financial Accountability Office of Ontario has warned about health care staffing levels at the current funding. What could the government have done to address that?

Ricardo Tranjan: I agree that what kind of beds we're going to get in matters a lot. And to reiterate my earlier point, I'm also concerned that this will be public run hospitals and clinics and not yet more privately run clinics like we announced for last December for orthopedic surgery. And I hope not to see more of those because our money will go further. I'm sorry, I forgot the second part of the no sorry.

Host: Financial Accountability Office of Ontario has warned that health care staffing levels under the current funding model, not it's understaffed. What could the government have done in this budget to address those numbers?

Ricardo Tranjan: One of the key things here that we haven't had a chance to talk about it. It's post-secondary training, right? This government has recently made very draconian changes to the OSAP, which is the Ontario Assistance Student Assistance Program that helps students to get through post-secondary education. We also have seen that this government has not come through for post-secondary institutions, including colleges, since the cap on international students. So overall, we have a system where post-secondary education is becoming more expensive, be it university, be it college, their class assistance for students to go through. And so a lot of the professionals that could be the potential professionals, the workers who could be looking at training that it's long, that is difficult, but that eventually pays off and that delivers the services that we need. A lot of them right now are second guessing. Should I invest? Can I afford how much debt will I have to take in order to become a nurse, in order to become a health professional? So I think, you know, the right investment here on this case would have been on post-secondary education, college training of all sorts. But we haven't seen that either, unfortunately.

Host: Was there anything that the province got right in the budget, in the education portfolio, in your eyes.

Ricardo Tranjan: In education portfolio? When you look at education right now, the only thing that is driving investment up is the childcare program. That has been a federal initiative. We haven't seen the same level of investment at either K to 12 schools. And we also have not seeing the same level of investment in post-secondary training.

Host: All right, Rosalie.

Rosalie Wanst: I might bring it back to health care a little bit and say that the government didn't necessarily have new initiatives in this budget, but there are initiatives that help with that are directly related to health, labour force and the the volume of care providers that are available. So we've the they're they've opened slots for nursing training and there's grants to potentially cover all of the educational costs for physicians that agree to practice family medicine in the province. And one thing where I think we should give credit is that the Ontario government last year and they did add a couple hundred million to it in this budget made, as far as we can tell, the largest investment in the history of the country in specifically primary care, and that though primary care attachment is still very much a challenge in this province, particularly with an increase in population and other things looking across the country, Ontario has the best results. They've actually matched more people with primary care, and they're, I would say, at least keeping pace with population growth. And so it is still a lot of people that need access. But we've made real headway on that in the last year. And that was because of a historic investment in the last budget.

Host: Okay. Noted on there. One thing that stuck out to me in the budget, a new program called the Protect Ontario Account Investment Fund, the government has allocated $4 billion for that. Can you help us understand what what it is and how it will work?

Ricardo Tranjan: Well, really, I think it's it's another one of those things that's in line with if you're wanting to invest in capital and you're running a business and you need new buildings, new equipment, new machinery that can lead to more jobs, more production. I, as we mentioned before, that small businesses might not have that cash on hand and that creating basically creating programs where you can get low interest government loans, grants and what not to make investments is realistically a good relief.

Host: What type of industries are we talking about here?

Ricardo Tranjan: I'm going to I'm going to admit I have not actually gotten through the entire 292. It is a long one, so I have I don't have the details on that one at this exact moment.

Host: All right. Ricardo, can I get you in on the investment fund?

Ricardo Tranjan: There is not a lot of information on this one yet.

Host: I'm relieved.

Ricardo Tranjan: I think it could be a good thing, and I hope it will turn out to be a good thing, you know, to use a cliché, you know, the devil's in the detail, right? What kind of industry are we going to be supporting? What's the process to assess those fundings? Are we going to be investing mostly in infrastructure and other kinds of production that tend to be male dominated jobs? Or are we going to keep in mind also other types of industries and other sectors that generate really great, really good jobs, not only for a particular population group, but a broader sector of society. So it could be a good thing and I hope it will be. But we need to watch this one closely.

Host: All right. I've got less than a minute left, but I do want to know, you know, there are over 400 municipalities in this province. They've had their eyes on this budget as well. What did municipalities get in this budget this year? Do we know anything, Ricardo?

Ricardo Tranjan: I don't that's the part that I have not yet had time to look at that closely.

Host: That's fair enough.

Ricardo Tranjan: Yeah. And I will say on my quick scan, it there wasn't anything in particular that jumped out at me, but I think that it's likely that given, shall we say, local, local Toronto issues, intergovernmental issues around sort of how Toronto and the province are interacting over various things. I think it might not be a spending item, but there will probably be more on that file to come.

Host: All right. All right. Well, we're going to have to leave it there. Ricardo, Rosalie, I really appreciate your insights on this. There's a lot of reading to be done on all of our parts. So and we are looking forward to seeing how this budget unfolds as well. Appreciate your insights on this one. Thank you so much.

Ricardo Tranjan: Thank you.