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The Progressive Economics Forum

Ontario NDP Platform: The Full Monty

Today, the Ontario NDP presented its comprehensive platform costing, including all policies announced during the election campaign.

A popular theme among commentators has been that platform costings are unrealistic given the deteriorating economic outlook. As Andrea Horwath noted, her platform includes significant contingency funds.

It is also cautiously built on the fiscal framework set out in the 2011 provincial budget. By contrast, the Liberal and Conservative platforms assume extra revenue arising from economic growth in excess of Budget 2011 projections.

A further point worth making is that elections should be about policy choices. Opposition parties formulating their own fiscal projections from the ground up would instead produce messy debates about differing economic assumptions and forecasting methodologies.

Voters are better served if parties measure their proposals from the same baseline. Constructing a platform on the last budget’s fiscal framework facilitates an appropriate focus on policy choices.

Another common refrain among commentators is that the Ontario NDP is emphasizing tax cuts. The following table is from the party’s fiscal framework document (page 10):

Fiscal Cost of Ontario Platforms, 2015-16, $ millions

                                                                 NDP  Liberal  PC
 Corporate Tax Cut                   $1,850  $1,850
 Unrestricted ITCs    $ 215  $ 215
 Targeted Tax Credits  $ 450  $ 12  
 Small-Business Cut  $ 90  $ 90  
 HST Off Necessities  $1,050    $ 820
 Other Tax Breaks    $ 215  $2,680
 Total Tax Reductions  $1,590  $2,382  $5,565
 Healthcare  $ 422  $ 182  
 Public Transit  $ 424  $ 6  
 Reduce Education Fees  $ 405  $ 486  
 Other Expenditures  $ 511  $ 519  $ 430
Total Spending Increase  $1,762  $1,193  $ 430
 Grand Total Cost  $3,352  $3,575  $5,995

In fact, New Democrats would increase provincial spending more than they would reduce taxes. They would invest more in public services than the Liberals and Conservatives.

The NDP would strengthen fiscal capacity by reversing corporate tax cuts and by making permanent the current restrictions on HST input tax credits. (The latter’s fiscal significance going forward is well illustrated on page 5 of the NDP’s fiscal framework document.)

Far from jumping on the tax-cutting bandwagon, Ontario New Democrats have staked out a fundamentally different policy direction than Liberals and Conservatives.

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Comments

Comment from Darwin O’Connor
Time: September 26, 2011, 6:05 am

This is the kind of comparative summary that the media should be providing.

Even having 50% of the platform cost being tax cuts is high for the NDP. The main controversy isn’t the amount but that the cuts aren’t very progressive and give benefits to fossil fuel users.

I won’t get much benefit from them, not because I have a high income, but because we don’t have a car and have a house with a low exposed surface area.

Comment from Matt Fodor
Time: September 26, 2011, 10:14 am

Darwin O’Connor is right: having “only” 50% of the platform cost being devoted to tax cuts is hardly a break with neoliberalism. Yes, it’s better than the Liberals and Conservatives, but it’s still pretty disappointing to see from a social democratic party. I think Nick Falvo’s critique still stands.

Comment from Bob Dylan
Time: September 26, 2011, 12:56 pm

So if I read this correctly, the NDP plan provides the least stimulus to the economy. NDP austerity is not much a break with neoliberalism either.

Comment from Toby Sanger
Time: September 26, 2011, 4:14 pm

Bob Dylan (still alive?) makes a penetrating and wry comment, but neglects one important thing. It isn’t just the size of your stimulus package that matters, but also what you do with it.

All empirically-based economic models show that public spending has a greater stimulus impact–in terms of GDP and job creation– than tax cuts. Corporate tax cuts have the weakest impact–about a third the impact of public investment. See
http://cupe.ca/updir/Ontario_Wage_Freeze_Presentation_Aug_30.pdf
also recent federal budgets and economic action plan reports.
It would be interesting to see if the NDP’s lower cost fiscal plan has a stronger economic impact than the more expensive Conservative and Liberal plans. Anyone done that?

Comment from Erin Weir
Time: September 26, 2011, 4:15 pm

Darwin and Matt,

Refundable tax credits are functionally equivalent to a grant program. If they were classified as expenditure, tax reductions would be one-third of the NDP platform.

By comparison, the Liberals are proposing two dollars of tax cuts per dollar of new spending. For the Conservatives, this ratio is thirteen to one.

The NDP is proposing two main tax changes:
– replace across-the-board corporate tax cuts with targeted credits.
– take the HST off some consumer purchases, but keep it on some business purchases only tangentially related to productive activity.

On balance, these measures would increase Ontario’s fiscal capacity.

Comment from Darwin O’Connor
Time: September 27, 2011, 11:00 am

I think the NDP should be held to a higher standard then being better then the Liberals and Conservatives.

Comment from Paul Weinberg
Time: October 1, 2011, 5:30 am

Hi Erin. Nick Falvo is suggesting that the NDP’s promised rebates on the HST are too expensive. Here is his quote –“And according to the platform document, removing the HST from home heating (natural gas and heating oil) would cost 10 times as much (on an annual basis) as the platform’s new commitments to home care.”

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