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Freedom Party of Ontario's 2012
OPPOSITION BUDGET
Submitted on March 21, 2012
to Members of the Ontario Provincial
Legislature
TABLE OF CONTENTS
Part I: The Essential
Problem
Part II:
Non-Solutions
Treating Health, Education, and Welfare as
Untouchables
Erroneous Proposals to Eliminate
ABCs
"Eliminating Waste" and "Cutting Red Tape"
Health Care: the Key Expenditure
Why Balance the Budget in 2012?
Part III: The Opposition
Budget
Overview of the Opposition Budget
Competition & Choice, Not
Privatization
Federal Funding Implications of Ending the
Government Health Care Monopoly
Budget Implications of Ending the Government's
Health Care Monopoly
Federal HST Windfall
Transfer
Ministry of Revenue, Welfare
Recipients
Balancing the Budget
Conclusion
PART I: THE ESSENTIAL PROBLEM
Ontario is currently running a $14B deficit.
Ontario's
government is operating on a plan that it
submits will
balance the budget by 2017-18 without making
cuts
to education or health care. As recently as
March 20,
2012, the premier opined that the province's
current
$214B debt is acceptable because, he
explained,
the federal government did not remedy its
debt crisis
until its debt to GDP ratio was 67%, whereas
Ontario's
ratio stands at 35%. There is mounting
evidence
that Ontario's March 27, 2012 budget will
fail
to take serious steps to balance the budget
any time
soon.
Yet, on February 15, 2012, the report of the
Commission
on the Reform of Ontario's Public Services
(a.k.a. the "Drummond Report") submitted
that, far
from achieving a balanced budget in 2017-18,
the
government's plan has Ontario on a path that
will
give it a $30.2B deficit in 2017-18,
together with an
accumulated debt of $411.4B. The government
has
rejected the adoption of the Drummond Report's
two
key explicitly quantified expenditure cuts:
elimination
of the $1.5B full-day kindergarten program,
and
elimination of the $1.0 Ontario Clean Energy
Benefit.
Meanwhile, the two opposition parties having
seats
in Ontario's Legislature are nigh mute when
it comes
to proposals for balancing the budget.
Little wonder,
given that both parties campaigned in
election 2011
on the Liberal government's promises: a
balanced
budget by 2017-18 without cuts to health
care or
education. All indications suggest that
members of
the opposition parties will support the
government's
budget because their respective parties have
insufficient
funds to finance a successful election
effort.
However, their silence on the government's
plan is
not borne only of a desire to avoid an
election. It is
actually the case that both the NDP and the
PCs,
were they currently to hold a majority in
the Legislature,
would not have any more inclination to
balance
the budget than have the governing Liberals.
In terms of both philosophy and policy,
little exists
anymore to distinguish the three parties
currently
holding seats in the Ontario Legislature.
The common
sense that prevailed in some earlier
governments
appears to have been entirely abandoned by
all three of those parties.
Ontario does not merely deserve better. We
need
better, and we need it now. Ontario both
deserves
and needs a counter-proposal to the
anticipated government
budget, which it appears will make no
serious
effort to avoid saddling Ontario taxpayers
with
crippling debt, hence higher taxes, hence an
undesirable
locale for business, jobs, and earning.
Ontario
needs an adult, responsible, rational
proposal
for balancing the budget in the immediate
term, without
further undermining the quality of the one
service
most important to all Ontarians: health
care. Ontario
needs a voice of opposition to the coming
budget,
not a blue and orange rubber stamp.
This, Freedom Party of Ontario's Opposition
Budget,
is an answer to the call for that voice. It
provides a
framework for achieving a balanced budget in
2012,
and for thereby avoiding the fiscal calamity
about
which the Drummond Report has warned the
province.
Moreover, it provides a solution that will
take
Ontario off of its current trend of
ever-increasing
expenditures by remedying fundamental
economic
and medical problems inherent in the current
system
of delivering health care.
PART II: NON SOLUTIONS
Before considering the Opposition Budget set
out in Part III, it is important to take a
clear look
at the fallacies inherent in the alleged
solutions
typically proposed by opposition parties.
The
fiscal situation in Ontario is too critical
to play
make believe with easy-sounding
non-solutions.
Treating Health, Education, and Welfare as Untouchables
Table 6 of the November 2011 Ontario
Economic
Outlook and Fiscal Review (hereinafter
referred to
as the "Outlook") provides the following "Actual"
2010-2011 Revenue, Expense and Deficit
figures for
the 2010-2011 year (the most recent year for
which
"Actual" figures have yet been published by
the Ministry
of Finance):
Total Revenues: $106.7B
Total Expense: $120.7B
Deficit: $14.0B
There are four areas of expenditure that are
considered
by some to be politically Untouchable:
health
care, education, welfare, and debt service.
Table 8
of the Outlook provides the following Actual
totals for
Untouchables in the year 2010-11:
- Health and Long Term Care ($44.085B)
- Health Promotion and Sport ($0.385B)
- Training, Colleges and Universities
($6.501B)
- Education ($21.850B)
- Community and Social Services ($9.148B)
- Interest on Debt ($9.480B)
The total expense for the 6 Untouchable
items is
$91.449 B. Therefore, after removing the
cost of
Untouchables from the provincial government's
$120.669 B total Actual expenditures for
2010-11,
total Actual expense for all other
ministries (i.e., the
24 remaining "Touchable" ministries) combined is
only $29.22B.
As noted above, the "Actual" deficit in the
same period
is represented, in the Outlook, to be: $14B.
Therefore,
if one seeks to balance the Ontario budget
in
2012 without making cuts to Untouchables,
47.9%
of the total expenditure on Ontario's 24
Touchable
ministries must be eliminated. To get a
better sense
of just how large that reduction would be:
the government
would have to eliminate entirely an
average
of 11.5 Touchable ministries to balance the
budget
in 2012 if it refused to reduce Untouchable
expenditures.
Gone would be such government functions as
justice, children's services, finance,
revenue, tourism,
transportation, aboriginal affairs,
citizenship/immigration,
energy, environment, etc..
Clearly, if the budget is to be balanced we
cannot
rule out changes to health, education, or
welfare.
Nothing can be treated as an Untouchable.
Erroneous Proposals to Eliminate ABCs
It is sometimes suggested that, without
making cuts
to health care or education, the budget
could be balanced
first and foremost by eliminating any
Ontario
agency, board, or commission (the so-called
ABC's
of government) that cannot justify its
existence. For
several reasons, that argument cannot
withstand serious
scrutiny.
First, the ABCs are funded by provincial
Ministries.
For example, the operating budgets of the
Assessment
Review Board, the Ontario Municipal Board,
the Ontario Human Rights Commission, the
Human
Rights Tribunal of Ontario, the Human Rights
Legal
Support Centre, and the Law Commission of
Ontario
totaled approximately $43M for the year
ending
March 31, 2010, and all of that money was
provided
by the Ministry of the Attorney General out
of its own
budget. Therefore, eliminating an ABC to
eliminate
its associated expenditures would have no
effect
on the budget unless the budget of the
Ministry that
funded the closed ABC were reduced by the
same
amount.
Second, many of Ontario's ABCs receive their
funds
from the health and education ministries.
For example,
the Ministry of Health and Long-term Care
not only funds 14 Local Health Integration
Networks
(the "LHINs"), but also funds administrative
support
to: the Ontario Review Board, the Consent
and Capacity
Board, the Health Services Appeal and Review
Board, the Health Professions Appeal and
Review
Board, and the Ontario Hepatitis C
Assistance
Plan Review Committee. Similarly, the
Ministry of
Education funds the Ontario Education
Communications
Authority (a.k.a. TVO). If one were on the
one
hand promising not to make cuts to health
care and
education, and promising on the other hand
to eliminate
ABCs that cannot justify their existence,
then
even if one were to eliminate all ABCs
funded by the
Untouchable health and education ministries,
there
would be no actual decrease in expenditures.
Third, the vast majority of Ontario's ABCs
have
budgets so small that they do not even need
to be
reported in Ontario's Public Accounts. Even
if one
were to eliminate all ABCs, including those
funded
by the Untouchable ministries, one could not
come
close to eliminating Ontario's $14B budget
deficit.
"Eliminating Waste" and "Cutting Red Tape"
It is sometimes proposed that the budget can
be balanced
by "eliminating waste" or "cutting red tape",
without making cuts to health care or
education.
However, if no reductions were made to the
budgets
of Untouchable ministries, the government
would
be left trying to find $14B in "wasted"
government
expenditures in the $29.22 B spent on
Ontario's 24
Touchable Ministries. In other words, it
would have
to be true that an incredible 47.9% of all
of the money
spent by all Touchable Ministries is pure
waste.
In fact, even if health care were treated as
the only
Untouchable, and waste were also sought in
education
and welfare files, 18.4% of the resulting
$76.23B
touchable expenditures would have to be
waste.
Even that percentage stretches plausibility.
It might well be argued that "waste"
includes paying
public sector employees wages that are
higher than
that paid to people who do the same kind of
work in
the private sector. And, given that wages
account
for a large percentage of all government
expenditures,
one most certainly could significantly
reduce
the deficit by bringing public sector wage
rates down
to market rates. However, those who are
currently
speaking of eliminating waste and cutting
red tape
do not include above-market wages in their
definition
of "waste". If above-market wages were
excluded
from the definition of "waste", it is highly
doubtful that
the government would be able to identify as
waste
47.9% of the budgets of Touchable
ministries.
HEALTH CARE: THE KEY EXPENDITURE
According to the Outlook, the Actual 2010-11
cost
of health care in Ontario was $44.47B, which
figure
represents 36.8% of all provincial
expenditures in
the same period. Actual health care costs
for 2010-
11 represented 41.7% of total provincial
revenue
from all sources, and consumed fully 62.5%
of Ontario
tax revenues. Numerous credible reports warn
that escalating health care expenditures
will increasingly
undermine Ontario's fiscal health.
The Drummond Report stated that were no
changes
made to Ontario's policies, programs, or
practices,
"...the deficit would more than double to
$30.2 billion
in 2017–18 and net public debt would
reach $411.4
billion, equivalent to just under 51 per
cent of the
province's GDP" (p. 2). It explained that,
to balance
the budget, "most of the burden of
eliminating the
$30.2 billion shortfall in 2017–18
must fall on spending"
(p. 2).
An April 2011 Fraser Institute report titled
"Canada's
Medicare Bubble: Is Health Spending
Sustainable
without User-based Funding" cites 19 other
reports
opining that the current growth in health
care spending
simply is not sustainable. The Fraser
Institute
elsewhere has projected that health care
spending
will consume 75% of provincial tax revenues
by
2019, and 100% of provincial tax revenues by
2030,
unless Ontario significantly restructures
health care
(Fraser Forum, February 2010, p. 10).
A February 2, 2012 report by the Conference
Board
of Canada titled "Ontario's Economic and
Fiscal
Prospects: Challenging Times Ahead" reported
that
if Ontario's health care expenditures were
increased
more slowly than they currently increase,
such that
they would account only for an aging
population and
the effect of price inflation, health care
spending
would grow an average of 4.7% per year. The
report
concluded that, under that scenario, the
provincial
government would be unable to balance its
budget
even by 2031. The report also concluded that
if Ontario
instead were to keep health care spending in
line with what it said was an
historically-observed
annual 5.6% rate of increase, Ontario's
budget could
be balanced by 2017-18 by increasing the
provincial
portion of the HST from 8% to 15%: a
staggering
54% increase in the HST burden of people
living in
Ontario.
The Drummond Report also submitted that:
"Adjusted for age, Canada definitely has one of the most expensive systems." (p. 154)
It continued:
"The high cost of our health care system could perhaps be forgiven if the spending produced superior results. It does not.
Canada does not appear in a favourable light on a value-for-money basis relative to other countries." (p. 155)
And concluded:
"The clear danger is that if we do not seize the opportunity to begin creating a more
efficient system that delivers more value for the money we spend on health care, one or two decades from now, Ontarians will face options far less attractive than the ones we face today. Unless we act now, Ontarians will be confronted with steadily escalating costs
that force them to choose either to forgo many other government services that they
treasure, pay higher taxes to cover a relentlessly growing health care bill, or privatize parts
of the health care system..." (p. 202)
However, despite the recency of some of
these reports,
and the recency of Ontario's most recent
double-
digit deficit, it would be a mistake to
conclude
that ever-increasing health care costs are a
recent
phenomenon, or that they are due only to an
aging
population (or to price inflation). In point
of fact,
Ontario's health care system has been said
to be
in "crisis", or to be "under-funded", every
year since
1969, when Ontario's Progressive
Conservative
government banned private health payments,
and
instituted a tax-funded government health
insurance
monopoly, OHIP.
The essential, perennial economic problem is
that
the current tax-funded model for health care
eliminates
any direct economic connection between the
health care provider and the patient. There
is no personal
cost to the patient for choosing to obtain
health
care services, so each patient's decision to
request
health services utterly disregards any
consideration
of the affordability of the services
requested. The
demand for health care is virtually
unlimited.
So long as demand is not limited by
considerations
of personal affordability, either tax
revenues must
rise to whatever level of demand is desired
by health
care recipients, or demands must be met with
denials
of health care services.
Increasing tax rates results, ultimately, in
reduced
economic growth. Reduced economic growth
reduces
potential tax revenue growth. It simply is
not
feasible to continue raising tax rates at
the rate of
increase in health care costs. Continuous
increases
of annual tax rates amount to an increased
disincentive
to the production of goods and services in
the
province and, ultimately, to a reduction in
the provincial
tax revenues upon which health care
currently
depends.
The other alternative - denial of health
care - is not
truly a means of maintaining Ontario's
health care
monopoly. A good or service that becomes
denied
(e.g., that is de-listed, or that is delayed
until the patient
no longer can benefit from the good or
service)
ceases to be a part of Ontario's health care
system:
service denial, in its various forms, is a
cannibalizing
of the government's health care monopoly,
not a
means of maintaining it.
Denial of health service takes two forms.
Where a
denial of service results in the good or
service being
made available in the private sector (e.g.,
de-listed
eye examinations), Ontario essentially is privatizing that part of the system. Where, instead, the
province
maintains a monopoly on the payment for and
provision of a good or service, yet denies
the service
to those who need it (e.g., by way of delays
that render
the service no longer to be of any benefit
to the
patient because the patient has recuperated,
has
deteriorated beyond the point at which
treatment is
effective, or has died) the government is
rationing,
and the cost of that rationing is the
health, physical
comfort, mobility, or even the life of those
waiting for
care.
Privatization is not a method of preserving
Ontario's
health care monopoly: by definition,
privatization is
the opposite of maintaining a government
monopoly.
Moreover, neither privatization nor
rationing are intended
to be ways to maintain or improve the health
care provided by the government health care
monopoly:
both privatization and rationing are simply
intended
as means by which the government attempts
to prevent the province's health care
monopoly from
pushing Ontario's budget into bigger
deficits.
The take home message is clear. The spending
side
of Ontario's budget deficit problem is
attributable primarily
to rising health care expenditures of the
Untouchable
health ministries, not to the expenditures
of Touchable ministries. To balance the
budget,
health care must be the focus of the effort.
Ontario must decide whether its goal is to
provide for
the health of the government health care
monopoly,
or to provide for the health of patients. If
the government
wishes save patients, it can no longer make
saving the current system its priority. Tax
revenues
cannot be expected to rise sufficiently to
afford the
soaring costs of saving patients within
Ontario's
health care monopoly. The monopoly, and its
taxfunded,
single-payer implications, must be ended if
patients are to be well served, and if the
budget is to
be balanced.
WHY BALANCE THE BUDGET IN 2012?
The 2011 budget set out a plan alleged to
have Ontario
balancing its books by 2017-18. The Drummond
Report submitted that the government's most
recent plans would not allow it to balance
the budget
by 2017-18. And the aforementioned
Conference
Board of Canada report suggests that,
without a
staggeringly high tax increase, Ontario will
not even
manage to balance its budget by 2031, due to
the
cost of the government's health care
monopoly.
Though such reports differ in their
conclusions, the
reports make one thing abundantly clear: all
talk of
balancing the budget five or nineteen years
hence is
ultimately the stuff of pure speculation
about future
revenues, together with overly optimistic
assumptions
about health care and other costs going
forward. In
other words: they are all based upon
speculation
about the future state of the economy.
Given the fact that planned future budget
balancings
founded on speculation may never be
realized, and
given the various budgetary problems
associated
with allowing the debt to climb in a period
of limited
economic growth, there is no justification
for waiting
for the right time to balance the budget.
The right
time is now.
Fortunately, there is a way to balance the
Ontario
budget now. Moreover, it can be done now in
a way
that actually improves health care
while keeping its
cost within an economically feasible range.
What follows is Freedom Party of Ontario's
Opposition
Budget for the year 2012. We acknowledge
from the outset that some of the associated
changes
required might take many months to
implement, but
we regard the commencement of that
implementation
to be something done pursuant to a 2012
budget.
PART III: THE OPPOSITION BUDGET
OVERVIEW OF THE OPPOSITION BUDGET
The Opposition Budget makes 10
recommendations
in respect of the 2012 Ontario provincial
budget, which are discussed in greater
detail in
the remaining sections of Part III:
- Take health care off-budget - discontinue
tax
funding for health care - thereby reducing
annual
immediate budgetary expenditures by
$44.47B, and thereby insulating the Ontario
budget from any future increase of health
care expenditures.
- Set up a Crown corporation, funded by
OHIP
insurance premiums, to administer OHIP.
Premiums initially to be set for all insured
individuals
at the approximate $3,600 per annum per capita cost
of health care for 2012.
- Repeal Ontario's production taxes, so
that
Ontario residents have the money they
need to purchase their choice of health care
payment options: OHIP, private health
insurance,
or cash/credit payment.
- With the exception of the HST, repeal
Ontario's
consumption taxes.
- Impose a 2.4% increase in the HST rate to
fully offset the revenue lost from the
repeal of
Ontario's other consumption taxes.
- Secure from the federal government the
$2.617B federal portion of the HST windfall
that will result from repealing the
aforementioned
production and consumption taxes.
- Collapse Ontario's Ministry of Revenue
for a
savings of $0.9B. Earmark the $0.9B savings
for ensuring payment in full of the OHIP
premiums of Ontario's 250,000 welfare
recipients.
- Eliminate all-day kindergarten ($1.5B per
annum) and the Ontario Clean Air Benefit
($1.0B), as recommended by the Drummond
Report.
- Impose an overall budgetary spending
reduction
of 7.5% as compared to 2010-2011
expenditures
on non-health items.
- With respect to reducing budgetary
spending
by 7.5%, focus upon bringing public sector
wages in-line with average private sector
wages paid for similar work via a Public-Private Pay Equity Act.
COMPETITION & CHOICE, NOT PRIVATIZATION
Ending the monopoly does not require
privatization
of OHIP. It requires the restoration of competition,
and a re-establishment of the economic link
between
the provider of health care services, and
the purchasing
decisions of the patient. Competition does
not imply that the government should cease
to offer
insurance (i.e., OHIP) for health care
services. It
means that patients should be able to choose
alternatives
to OHIP, such as private insurance or cash/
credit payments. It means that health care
should
cease to be funded by tax revenues; that it
should
be an off-budget expense of Ontario
residents. That
implies that taxes currently collected to
pay the cost
of health care must be reduced or eliminated
so that
Ontario residents have the money they need
to purchase
the health care or health insurance of their
choice. It means that those who choose to
continue
to be covered by OHIP will pay OHIP directly
for that
insurance, rather than paying for OHIP
through taxes.
It means that those who choose to be covered
by another insurer will pay that insurer for
the insurance, and that those who choose not to purchase
insurance will be free to save their money
and pay
health care providers directly for the
services they
obtain, when they obtain them.
Nor does ending the government's monopoly
necessarily
imply discontinuing the practice of
providing
free health care to those who produce little
or no income.
Recent estimates of the number of people in
Ontario receiving social assistance place
that number
at between 230,000 and 240,000, all of whom
are
entitled to free health care from Ontario's
health care
monopoly by virtue of their Ontario
residency. The per capita cost
of health care in Ontario is between
$3,500 and $3,600. Assuming the number of
people
receiving social assistance is currently
250,000, the
annual cost of providing free OHIP health insurance
to all 250,000 would be approximately $0.9B
(assuming
premiums of $3,600.00 per policy).
FEDERAL FUNDING IMPLICATIONS OF ENDINGTHE GOVERNMENT HEALTH CARE MONOPOLY
Owing to early 20th century fiscal
arrangements
between the federal and provincial governments
respecting
the jurisdiction to tax income and
respecting
the federal government's adoption of central
planning,
the federal government to this day transfers
federal revenues to Ontario's provincial
coffer. Currently,
the federal funds are categorized as
transfers
relating to health, education, and welfare
(i.e., the
Untouchables). According to the Outlook, one
such
transfer - the Canada Health Transfer -
amounted
to a $10.184B contribution to the provincial
coffer in
2010-11.
The Canada Health Act ("CHA")
is a federal statute.
Two common fallacies - promoted by
proponents of
a government health care monopoly - continue
to fog
the path to a sustainable system of health
care. One
fallacy is that the CHA limits the
legislative discretion
of the provinces in respect of health care.
That
is false because Canada's constitution
dictates that
the making of health care legislation falls exclusively within the jurisdiction of the provincial
Legislature.
The other fallacy is that allowing such
things as private
sector health insurance, direct payments by
patients
to health care providers, or the elimination
of
tax-funding for government health insurance
would
violate the CHA and cause a reduction
in Ontario's
portion of the Canada Health Transfer. As
explained
below, that assertion is equally false.
Section 15 of the CHA permits (but
does not require)
the Governor in Council to order a reduction
in the
Canada Health Transfer to a province that
lacks a
"health care insurance plan" meeting the five
conditions
or "principles" set out in sections 8
through 12
the CHA.
Subsection 8(1)(a):
"In
order to satisfy the
criterion respecting public administration,
the health care insurance plan of a
province
must..."
Section 9:
"In
order to satisfy the criterion
respecting comprehensiveness, the health care insurance plan of
a province must..."
Section 10:
"In
order to satisfy the criterion
respecting universality, the health care
insurance plan of a province
must..."
Section 11(1)(a)/(b)/(c):
"In
order to satisfy
the criterion respecting portability, the health care insurance plan of
a province must..."
Section 12(1)(a)/(b)/(c)/(d):
"In
order to
satisfy the criterion respecting
accessibility,
the health care insurance plan of a
province
must..."
In each partial quotation above, the phrase "health
care insurance plan" has been italicized
because to
know what sort of health care system
satisfies those
five conditions requires one to take note
that the five
conditions apply only to what section
2 of the CHA defines as a "health care insurance plan":
"health care insurance plan" means, in
relation
to a province, a plan or plans established by the law of the province to
provide
for insured health services (emphasis added)
That definition makes it clear that,
throughout the CHA, the term "health
care insurance plan" does not refer to a plan that is not "established
by the law of
the province", and it does not refer
to the provision
of health care services, to private health
insurance
plans, or to private cash payments for
health care
services.
A proper interpretation of the CHA requires
a recognition
of the fact that:
1. the CHA neither states nor implies
that the
"health care insurance plan" of the province"
be the only health insurance plan in
the province;
2. the CHA neither states nor implies
that the
province prohibit the purchase and sale of
for-profit or non-profit health care
insurance
that is administered and operated by private
persons; and
3. the CHA neither states nor implies
that the
province must compel individuals to pay for,
or be covered by, the province's "health
care
insurance plan": the CHA does not
require
that all Ontarians be covered by OHIP.
Rather,
section 12 ("Accessibility") of the CHA requires only that the health care insurance
plan of a province "...provide for payment
for
insured health services in accordance with
a tariff or system of payment authorized by
the law of the province." The CHA is
crafted
to be compatible with a wide variety of
payment
models. Nothing in the CHA requires
the province's "health care insurance plan"
to be paid for with provincial revenues
(e.g.,
tax revenues). Even a voluntary payment
of
premiums by only those who choose to
participate
in a province's "health care insurance
plan" constitutes a "system of payment" that
could be "authorized by the law of the
province".
In short, the CHA does not require
Ontario to have a
tax-funded government health insurance
monopoly,
or to prohibit health care providers from
receiving
their pay from patients or their respective
private
sector health insurers. Accordingly, the
discretion
given to the Governor in Council in section
15(2) of
the CHA would not be triggered by
allowing private
sector payment alternatives to OHIP (e.g.,
private
health insurance or cash payment), or by
allowing
health care providers to accept payment not
only
from OHIP but also directly from patients or
from
their private sector insurers. Ending
Ontario's governmental
health monopoly would not give the
Governor
in Council the discretion to reduce Ontario's
Canada Health Transfer.
BUDGET IMPLICATIONS OF ENDING THE GOVERNMENT'S HEALTH CARE MONOPOLY
As explained in Part I, the broad budgetary
picture
is as follows. Based upon the most recent "Actual"
budget data set out in the Outlook (i.e.,
data for
2010-2011):
Total Revenues: |
$106.7B |
Total Expense: |
$120.7B |
Deficit: |
$14.0B |
Ontario health care spending is chiefly
comprised of:
Health and Long Term Care |
($44.085 B) |
Health Promotion and Sport |
($0.385 B) |
Making OHIP the responsibility of a Crown
corporation
funded by insurance premiums rather than tax
revenues would remove this spending from the
budget,
leaving a net budgetary expenditure of
$120.7B
- $44.47B = $76.23B.
The Harmonized Sales Tax ("HST") is a consumption tax administered not by Ontario's Ministry
of Revenue,
but by the Canada Revenue Agency ("CRA").
In 2010-11, Actual revenue from the 8%
provincial
portion of the HST was $18.813B.
In 2010-11, the remaining Ontario provincial
taxes,
which are currently administered by Ontario's
provincial
Ministry of Revenue, raised the following
revenues
(in Billions), respectively:
Consumption Taxes
Gasoline
Tax........................................ |
2.358 |
Land Transfer Tax................................ |
1.247 |
Tobacco
Tax......................................... |
1.160 |
Fuel
Tax............................................... |
0.702 |
Beer & Wine
Taxes.............................. |
0.397 |
Electricity Payments-in-Lieu of Taxes.. |
0.321 |
"Other Taxes"....................................... |
0.562 |
|
_____ |
Sub-total.............................................. |
6.747 |
Production Taxes
Personal Income
Tax............................ |
23.624 |
Corporations
Tax................................. |
8.383 |
Education Property
Tax....................... |
5.913 |
Employer Health
Tax........................... |
4.733 |
Ontario Health
Premium...................... |
2.934 |
|
_____ |
Sub-total............................................. |
45.587 |
|
_____ |
Total Revenue from Provincial Taxes other than HST....................... |
52.334 |
It will be noted that Ontario's health care
expenditure
of $44.47B is paid for entirely by
production taxes
totaling $45.587B. This indicates a further
disadvantage
of our single-payer, tax-funded model of
health
care funding: it accounts almost entirely
for a regime
of taxes that discourages production,
earning, and
saving in the province.
Federal HST Windfall Transfer
This Opposition Budget recommends that
Ontario's
Consumption Taxes and Production Taxes,
listed
above, be repealed, leaving HST as the sole
source
of provincial revenue. The $52.334B revenue
no
longer collected through the repealed
Ontario Consumption
and Production taxes will thereby be left
in the hands of the taxpayer. Those funds
will be
used to purchase goods and services, which
will be
taxed by the HST. Accordingly revenues from
the
HST will increase. Given that the HST
revenue increase
will be attributable to the repeal of
Ontario's
production and consumption taxes (other than
HST),
there can be no justification in a $52.334B
x 5% =
$2.617B federal windfall. The 5% federal
portion of
the HST windfall is rightly payable to the
province
given that the windfall will be the result
solely of tax
restructuring at the provincial level. It is
therefore
recommended that the province demand an
annual
federal HST Windfall Transfer of $2.617B
indexed to
the rate of inflation.
Ministry of Revenue, Welfare Recipients
The Ontario Ministry of Revenue's $0.9B
annual
cost of administering Ontario's taxes (not
including
the CRA-collected HST) will be eliminated by
repealing
those taxes. Apart from tax collection
activities,
revenues collected by the Ministry of
Revenue for
fees and licensing in 2011 totaled only
$1.722M in
2011. Accordingly, it is recommended that
Ontario's
Revenue ministry be eliminated and that its
role in
collecting fees and licenses be absorbed by
an already-
existing ministry, such as Finance.
Without making other provisions, taking
health care
off-budget would leave Ontario welfare
recipients
without the free health care they currently
have. Recent
estimates place the number of individuals
currently
receiving welfare at under 250,000
individuals.
Ontario's 2010-11 Actual per capita health
care
expenditures totaled just under $3,600.
Accordingly,
to provide for the transition to off-budget
health care,
the $0.9B saved from collapsing the Ministry
of Revenue
should be set aside for the provision to
welfare
recipients of free OHIP coverage.
Balancing the Budget
Based on 2010-11 Actual figures set out in
the Outlook,
the HST raised revenues of approximately
$18.813B. The aforementioned $52.334B in tax
savings realized by taxpayers would be spent
by
taxpayers on goods and services, such that
total
provincial revenues (including the federal
HST
Windfall Transfer) would be increased by
virtue of
the application of the 13% HST to those
expenditures:
52.334 x 13% = $6.803B.
Taking $44.47B in health expenditures
off-budget,
repealing $52.334B in Ontario taxes, and
increasing
provincial HST revenues by $6.803B changes
the
budget picture as follows:
Current Total
Expenditures....... |
120.700B |
|
minus Health Expenditures.... |
( 44.470B) |
|
|
________ |
|
Net Expenditures |
76.230B |
|
|
|
Current Total Revenues............ |
106.700B |
|
minus Ontario Taxes.............. |
( 52.334B) |
|
plus additional HST revenue.. |
6.803B |
|
|
________ |
|
Net Revenues......................... |
61.169B |
|
|
|
|
Surplus/(Deficit)................... |
(15.061B) |
The following recommendations would reduce
the
$15.061B difference noted above to the point
of balancing
the budget:
1. As suggested by the Drummond Report,
eliminate all-day kindergarten ($1.5B) and
Ontario Clean Energy Benefit ($1.0B).
2. Increase in the HST rate sufficiently to
offset
the $6.747B in revenues lost from the
repeal of the aforementioned Consumption
Taxes. After taking into account additional
HST revenue realized from the repeal of
Ontario's
Consumption and Production Taxes,
the 13% HST (excluding the federal HST
Windfall Transfer) would provide Ontario
with
$18.813B + $6.803B - $2.617B = $22.999B.
The provincial portion of the HST being 8%,
each percentage point would account for
$22.999B / 8 = $2.87B. Accordingly, a 2.4%
increase in the HST rate would result in an
HST revenue increase of 2.4 x $2.87B =
$6.888B.
3. The two recommendations above would leave
a difference of $15.061B - $2.5B - $6.9B =
$5.661B. It is recommended that the
remaining
$5.661B be addressed through an
additional overall budgetary spending
reduction
of 7.5% as compared to 2010-2011
spending on non-health budget items: 7.5%
x 76.230B = $5.717B. The reduction would
leave a small surplus of: $5.717B - $5.661B
= $56M. It is recommended that that surplus
be earmarked for the costs of transitioning
to
a competitive, off-budget health care
system,
including the creation of a crown
corporation
to administer OHIP.
CONCLUSION
This Opposition Budget provides a means of
balancing
Ontario's budget in 2012. It strikes the right
balance
between spending restraint and tax rate
increases.
This Opposition Budget also provides a fix
to the economic
flaw inherent in the single-payer,
tax-funded
government monopoly system of health care
delivery
currently in place in Ontario. By re-establishing
the economic link between patient and health
care
provider, and restoring competition, market
forces
will act to control health care costs while
maximizing
the per-dollar quality of health care
provided.
If implemented, this Opposition Budget will
stimulate
economic activity in the province by
providing North
America with a jurisdiction having a low tax
burden,
and low tax administration burden. In fact,
Ontario
will be one of only 4 Canada-US
jurisdictions imposing
no tax on personal and corporate income (the
other three are Texas, Wyoming, and Nevada).
It
will position Ontario as North America's
preferred
centre for production, earning, saving,
investment
and innovation. With an aging population,
the opening
of health care to competition will make
Ontario
the site of a growing health sector.
As leader of Freedom Party, I hereby
heartily
recommend a serious consideration of this
Opposition
Budget by the honourable members of
the Ontario Legislature, and by those who dutifully
report on their actions...and omissions.
All of which is hereby respectfully
submitted this
21st day of March, 2012.
______________________________________
Paul McKeever, B.Sc.(Hons), M.A., LL.B.
Leader, Freedom Party of Ontario
|