The Ontario NDP Platform

By Nick Falvo 
Progressive Economics Forum
September 20th, 2011

Pollsters tell us that Ontario’s New Democrats may double their seat total in next month’s provincial election. It’s also entirely conceivable that they could be part of a coalition government at Queen’s Park. But what’s actually in the party’s election platform?

One central feature of the NDP’s proposals is to implement a tax credit for companies that hire new workers. The tax credits would be valued at 20 percent of wages to a maximum of $5,000 per worker. This only applies to the creation of full-time, permanent jobs.

The NDP also proposes to: remove the HST from electricity and home heating; remove the HST from gasoline by one percentage point a year; reduce the small business tax rate; and implement a Buy Ontario policy.

In terms of actual spending, the NDP proposes to increase funding for public transit, on condition that municipalities freeze transit fares. It also proposes to invest more in acute long-term care beds, increase home care hours, increase the minimum wage to $11/hr. (and then index it to inflation), open 50 new family health clinics , implement a new housing benefit for low-income households, create new affordable housing units, and bring in an emergency dental care program.

On the revenue side, the cornerstone of the current platform is to generate approximately $2 billion in additional annual revenue by increasing the corporate tax rate.

I have six concerns about the platform.

1. Scale. Annual provincial government revenue in Ontario currently stands at roughly $100 billion. Thus, the NDP is proposing to finance the bulk of its new spending commitments with roughly a two-percent increase in annual revenue. In light of how much tax rates have decreased in Ontario since the mid-1990s, I find this a bit timid.

Some critics will argue that further increases in corporate taxation might drive away business investment. But when fellow PEF blogger Erin Weir appeared on TVO’s The Agenda recently, I thought he did an effective job of countering such criticism. Furthermore, corporate taxes aren’t the only kind of taxes that the NDP could propose to increase, and that brings me to my next point.

2. Taxing The Rich. The NDP’s platform shies away from proposing changes to personal income tax rates, even for the highest-income households. I think wealthy Ontarians could and should pay more, especially in light of rising health care costs and the work that remains on the poverty-reduction front. As the CCPA’s Bruce Campbell argued earlier this year, 25,000 Canadians—a great many of whom live in Ontario—have an average annual income of $1.5 million. What’s more, over the past three decades, this group has more than doubled its share  of national income. Finally, this group pays less tax overall as a portion of its income than the poorest 10 percent of Canadians.

3. Priorities. From where I stand, the commitments in the platform that carry the biggest price tags are the ones that would seem to have the most populist appeal. For example, the single most expensive item in Year 4 is the removal of the HST from gasoline.  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.

4. Environment. As indicated above, the NDP is proposing to remove the HST on electricity, home heating and gasoline. When criticized for making proposals that would make it cheaper to pollute, some New Democrat supporters have defended the proposals on the grounds that these same proposals would assist low-income households, especially those living in rural areas. I would argue that, insofar as the NDP is concerned about low-income households, it would be more sensible to keep the HST in place and use the revenue to fund green-energy programs for low-income households. (Incidentally, for more on this issue, check out Brendan Haley’s excellent CCPA paper on the “politics of energy cost,” looking at the Nova Scotia context.)

5. Poverty. A single adult (without dependents) on welfare in Ontario currently receives less than $7,900 a year. Could you live on that? In real terms, this figure is roughly 35 percent less than it was in the mid-1990s. Yet, the NDP is proposing that social assistance benefit levels stay at this level and be indexed to inflation. What’s more, the new housing units promised are planned over a 10-year period and are conspicuously absent from the actual platform document (which is 48 pages long). Likewise, the new housing benefit and the emergency dental care program do not appear in the platform document. Nor does the platform document make any mention of the NDP creating more child care spaces. Given that the platform costs out the major proposals, I find it unsettling that the anti-poverty measures are left out of it. Does that mean money would only be spent on them during a second mandate?

6. Post-Secondary Education. As I’ve blogged about before, tuition rates in Ontario are the  highest in Canada. Ontario’s NDP is proposing to freeze them at these levels. It also proposes to eliminate the interest on the provincial portion of student loans, which, for a student with a $25,000 student loan, would amount to an annual savings of $60. In my mind, this pales in comparison with the undergraduate tuition grant being proposed in the current election campaign by the governing Liberals, which would be worth $1,600 per year for a full-time undergraduate university student.