On February 25, the Ontario Liberals unveiled their budget for the 2016-17 fiscal year. The centrepiece of the 346-page document was a pledge to make post-secondary education free for families earning under $50,000 a year. The working poor have cause to celebrate: Premier Kathleen Wynne’s “activist” government seems to be finally living up to its name – but is it really? Or is this budget just another example of “talking left and governing right”?
Under the new Ontario Student Grant (OSG), students from families earning under $50,000 a year will have their tuition made free. In addition, “middle-income” students will also have their tuition costs reduced. The logical question then follows: how is it that a government committed to erasing the deficit has found so much new money for poor students? The answer: they haven’t. The new system of funding will replace the mishmash of tax credits and grants that existed before it. The Wynne government claims the new costs will be "roughly the same" as the $1.3 billion in aid that is being replaced.
In other words, only already existing money will be committed to help with tuition costs. Fanfare aside, all the Liberals have really done is shift money around, label it "free education" and pat themselves on the back repeatedly for it.
If, however, the cost of implementing the OSG ends up exceeding the cost of the old grant/tax credit system, working families should be advised to hold their breath. While headlines may give the impression that money is being showered on post-secondary education, the opposite is in fact true. In reality, the rate of funding for post-secondary education is set to decrease.
On budget day, The Globe & Mail was quick to note that the Liberals were "keeping a tight lid on spending". It then went on to explain how they propose to do that:
"[For the next three years] the province’s three largest spending areas – health care, education and postsecondary education – will be held to average annual increases of 1.8 per cent, 1.2 per cent and 1.1 per cent, respectively."
With inflation anticipated to be higher than 2 per cent, the result will be a net decrease in funding for each of these three areas. Of these, postsecondary education is slated to be the worst hit. This should sow suspicion in the Liberal’s newfound love for students. It is also important to note that even if there was dramatic increase in funding to the OSG, this could only come at the expense of deeper cuts to other areas.
This, however, is not the only caveat with the OSG. From what the government has said thus far, the OSG will not be linked to tuition levels. It is important to remember that what universities and colleges charge in tuition fees is separate from what the government provides in grants. One may dramatically increase, while the other remains flat. That means the value of the OSG in 2017 would remain the same even if tuition levels were to triple in the future (which they have in Ontario since 1993).
In fact, the 3 per cent cap on tuition increases that currently exists is set to expire in 2017. As of now, it is unclear whether the Liberals are going to impose a new cap, if any, on tuition increases. On this, as with everything else, the Liberals leave more questions than answers. While a programme of free education for low-income families is undoubtedly progressive, it remains that the Liberal proposal is both vague and filled with holes.
What’s not uncertain, however, is the wave of enthusiasm around the idea of “free education”. This is something that only yesterday was said to be unrealistic or impractical by even labour and student leaders. In the past election, for example, the Ontario NDP would only commit to a tuition freeze and zero-interest student loans. Perhaps even more scandalous is that for the past decade the leaders of the left-leaning Canadian Federation of Students (CFS) have refused to publicly raise or mobilize around the demand for universal free education. This demand must now be enthusiastically taken up as a means of holding the Liberals to account, and exposing them if they backtrack.
Moreover, tuition freezes and zero-interest loans will not fundamentally solve the problems that students and young workers face. Tuition is already unaffordable and loans an incredible burden. Raising and mobilizing around the demand for universal free education would be a significant step forward for the student movement itself and would be a powerful beacon to all students facing the reality of austerity with rising tuition costs, deteriorating living and working conditions, the skyrocketing cost of housing, poor job prospects, etc. The demand for free education is directly connected to other questions such as jobs and housing and cannot be made on its own. The demand for universal free education must be taken up as an immediate step to improve the lives of students and the education system and must therefore be linked with broader demans for decent jobs, affordable housing, access to quality social services, etc.
Another centrepiece of this budget has been the introduction of a cap-and-trade system for greenhouse gas emissions. This system sets a “cap” on emissions through the issue of permits, which are then purchased and sold by industry in the open market. Beginning in 2017, Ontario will enter a carbon-trading market made up of itself, Quebec and California to this effect. While this may fit into the “activist” narrative of the current government, the hole in their plan is so big as to make the ozone layer jealous.
As with any scheme to penalize industrial polluters, the system is only as effective as those who enforce it. How much can be expected of the Ontario Liberals, who are connected to those same polluters by a million and one strings? As their own budget makes plainly clear – almost nothing.
Just as soon as the scheme was unveiled, it was discovered that some of the largest industrial polluters (102 of them, to be exact) would be given temporary free permits to help ease their fears with cap-and-trade. But this “temporary” measure will be in place for a full four years, after which the Liberals can only promise a “review” of the practice!
Nonetheless, the Ontario Liberals have shown less compassion for working people than they have for industrial polluters. As a result of cap-and-trade, average Ontarians will be forced to pay a levy of 4.3 cents for every litre of gasoline at the pump, and up to $6 a month for heating in the average home. Unlike big industry, there will be no “reprieve” or “review” of this indirect gas tax.
Even then, this will likely do little to abate climate change – which is the intended purpose of the system. As noted by Edward Keenan, an advocate of carbon taxes, in The Toronto Star:
“How many car owners are going to rearrange their lifestyles — move closer to work, or switch to public transit, or take up cycling — to avoid a 4.3-cent a litre tax? How many people are going to renovate their homes to avoid a $5-a-month increase in heating costs? I expect the answer to both questions is ‘not many’.”
Premier Wynne has repeatedly warned of the “cost of doing nothing” in regards to climate change, but no one figured that cost would be 4.3 cents extra at the pump!
More Austerity to Come
We should make no mistake in calling this budget what it is – an austerity budget. As mentioned earlier, decreases in funding are slotted for all three major spending areas – including post-secondary education. Even some of the more harmless proposals, such as making prescription drugs free for seniors earning under $19,300, harbour tax increases that target some of Ontario’s most vulnerable. The Liberal-friendly Toronto Star editorial board itself was forced to comment:
“Seniors earning more than that modest level [of $19,300] will see their annual deductible almost double to $170 and their co-pay go up by a dollar per prescription […] for thousands close to the line it’s a slap in the face. Surely Ontario is wealthy enough not to demand more from old people getting by on poverty level-incomes.”
But this is hardly the end of the Wynne-era austerity. The deficit is projected to be at $4.3 billion in the 2016-17 fiscal year to zero in 2017-18. Barring a surprise uptick in the economy, these billions in cuts will ultimately fall on those they have since Wynne was elected – the working class. And whether you call it an “activist budget,” or whether you call it French toast, a spade remains a spade. At the end of the day, this budget sets no departure from the agenda of school closings, layoffs and privatization. In fact, it intensifies it.
These factors have led to a steep decline in approval for Wynne’s performance, which now stands at an abysmal 29 per cent. Disapproval, on the other hand, stands at 60 per cent. As support continues to decline, the Ontario Liberals will be forced to be ever more inventive in diverting attention from their attacks on workers. “Free education” and cap-and-trade are just the latest half-hearted “progressive” initiatives to this effect. But just like someone with a gun pointed to their head, the Ontario Liberals will promise anything if it means staying alive.
But even the few reforms Wynne has eked out are based on incredibly shaky fiscal projections. As noted by Andrew Coyne in The National Post:
“That revenues are nonetheless projected to soar represents one part wishful thinking, one part federal transfers — Ontario now depends on Ottawa for nearly $25 billion annually, twice what it received a decade ago — and one part dodgy accounting. In the current fiscal year, for example, the government will book $1.1 billion from its “Asset Optimization Strategy,” otherwise known as the partial sale of Hydro One: a one-time gain that does nothing for the government’s fiscal position in the longer term.”
What can also be added to this is an unexpected $504-million in revenue from HST on housing purchases, as well as historically low interest rates, which have lowered the cost of servicing Ontario’s debt load (which at $308 billion is the largest sub-sovereign debt load in the world). Finance Minister Charles Sousa himself admitted that “uncertain economic winds are currently blowing in the right direction for Ontario.” But what will happen when those winds begin to blow in the opposite direction? A collapse in the global economy, an uptick in interest rates, a reversal in transfer payments, a burst in the housing bubble – any one of these variables could easily upset the fiscal projections of the government. Simultaneously they could imply austerity on a level that has been seen across Europe.
Unlike the federal government, the Ontario Liberals have far less room to “borrow and spend” their way out of a crisis. The provincial government already spends an incredible $11.8 billion to service the debt every year. To put this into perspective, interest payments make up the third largest expenditure after education in the province. The credit rating agencies already downgraded Ontario’s rating in July of last year. They will not hesitate to do so again if the government wavers from its commitments to balance the budget. In other words, there is no room for the government to manoeuvre. They have no choice but to take the road of austerity.
What Comes Next?
While the Ontario Liberals may have refined their strategy of “talking left and governing right” with this budget, there are fixed limits to how long people can be duped. Unlike Trudeau, their post-election honeymoon has long since faded. The Wynne Liberals hope the Ontario Student Grant will prevent a Quebecois Spring from ever happening here. But rather than pacify students, it may well have the opposite effect of empowering them. Students who yesterday saw free education as a pipe dream will now feel that it is within reach. This can have an unintentionally radicalizing effect. Free post-secondary education would alleviate a massive burden for thousands of students, and the demand for universal education could be a powerful impetus in the mobilization of students for the struggle against poverty and austerity. As for the workers, the government is setting itself up for a showdown. The agenda of privatization, layoffs and wage cuts can only continue for so long before a breaking point is reached. Where and when that will happen is conditional on the tempo of the economic situation, as well as the leadership of the labour movement. But if one thing is certain, it is that the Ontario Liberals are walking an incredibly fine line.