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Glen Murray Releases Full Fiscal Plan

Friday, January 4th 2013 3:17:23pm

Leadership Candidate Takes On “The Elephant” To Protect McGuinty Liberal Legacy

For immediate release

Toronto - Glen Murray today released his detailed fiscal and economic plan - the comprehensive framework spelling out how he will address "the number one challenge facing the next Premier.

"As Liberals, we all know that Ontario is in a serious fiscal crunch," said Murray. "Half of the measures we need to take have been taken on by the McGuinty government to date," he said.

"The remaining challenge — tens of billions over the next five years — have yet to be determined. This next round of choices is the elephant in the room of this leadership campaign, and I'm taking that on."

Murray's plan shows how Ontario will meet the fiscal challenge, while protecting and enhancing vital services like schools and health care.

"We have to change course on our economic and tax policies," said Murray. "We need more jobs and growth and we need to do more for middle-income Ontarians. Otherwise the McGuinty legacy which we've worked so hard to build will be jeopardized."

As Premier, Glen Murray will help middle-class Ontario families with tax breaks and no-money-down tuition. He will also stimulate job creation with targeted tax cuts for innovative businesses. "These measures will boost the economy," said Murray, as they have done in other jurisdictions.

At the same time, Murray unveiled measures to enhance government productivity through innovation in program delivery. "My Liberal plan for targeted tax relief and innovative government will balance the books and maintain the core investments we have made in education and health care," he said.

The package spells out how Murray will achieve these goals while keeping within the fiscal framework that will see the province’s budget balanced by 2017-18.

“We’ll review our entire system of tax deductions, exemptions, credits and different rates to make sure they focus better on building the economy we need. To meet our deficit targets and still provide the services Ontarians rely on, we need to grow our revenues, and I have the plan,” he said.

“We’ll be sure that that we live up to our fiscal responsibilities while we never, ever have to live through again what we lived through with PC and NDP governments, with closed hospitals and compromised public services.”

Glen Murray’s fiscal and economic plan includes:
• Converting Registered Retirement Savings Plan and Child Care deductions to grants, and shifting the burden for tuition to after graduation - putting more money into Ontario families’ hands while costing the government less
• Focusing tax incentives on innovative companies that provide higher-quality jobs and economic growth, which would boost business activity and enhance tax revenues by as much as $590 million a year
• Reviewing, consolidating and reorganizing government agencies - a move Glen Murray made successfully as Minister of Training, Colleges and Universities. Glen Murray would also have government agencies that deal with private disputes pay their own away instead of relying on taxpayer funds.
• Smart government - consolidating and centralizing government offices where work can be handled more cost-effectively
• Setting up a budget contingency reserve fund each year - a safety cushion to ensure there are no last-minute surprises due to global economic uncertainty.

“The Hudak PCs want to shrink the government as far as they can, taking away health care programs and threatening full-day kindergarten. The NDP have no plan - they don’t understand the fiscal challenge and can’t say no to unions and special interest groups," Murray said.

Only Ontario Liberals have the capacity to tackle the fiscal challenges faced by our province while standing by families, working to grow our economy and create good jobs.

And as our next Leader, Glen Murray has a comprehensive plan to meet the challenges and sustain the McGuinty legacy.

Glen Murray’s leadership campaign of ideas and action is built on renewal for Ontario families and our economy:

• Tax cuts for the middle class and small business
• No-money-down university or college tuition
• Cities and towns that work
• Smart government that listens - working together to protect and renew our hospitals and social services.

For more information:
Emily Kirk
647 668 1076


For immediate release
January 4, 2012


The Challenge

The next Leader of the Ontario Liberal Party will inherit a proud record of accomplishment. The gains we have made together over the past nine years under the leadership of Dalton McGuinty are a strong legacy and foundation for Ontario’s next great advances. After 12 years of misrule and missed opportunities by NDP and PC governments, Ontario Liberals have made huge progress rebuilding our public services, our schools, health care and the infrastructure that makes our communities great.

It has been challenging. And our next Leader will face a profound fiscal challenge born of the worldwide recession that began in 2008 compounded by the legacy of debt left behind by the NDP and PCs.

The global crisis was not made in Ontario but we had to respond, and we did. Like most other responsible governments, helping our families meant incurring deficits during this recession. The deficits of recent years, including 2012/13, are the price we paid as Ontarians to protect our economy, preserve our jobs, our public services and our families. Ontario’s recovery has been better than most and is continuing.

Ontario Liberals can be proud of the responsible fiscal stewardship provided by our Finance Ministers Greg Sorbara and Dwight Duncan. On a per-capita basis, the cost of Ontario’s Government is among the lowest in Canada and services are delivered with the lowest per capita number of public servants in Canada.

Responsible fiscal management is part of our legacy. Prior to the full impact of the recession in 2009/2010, Ontario Liberal governments posted six consecutive operating surpluses and three overall surpluses. Current projections show we are on track to return to an operating surplus by 2014/15.

We face more challenges.

We need to deal with the overall budgetary deficit that is the result of interest payable on the Province’s accumulated debt.

Between 2013 and 2017 the total operating surplus is projected to be $34 billion but interest payable on the debt is $68 billion. This means our next Premier and our next Ontario Liberal government faces a $34 billion challenge over the next five years.

A credible and comprehensive plan is required.

As Premier, Glen Murray has a plan to meet this challenge.

The Current Fiscal Plan

The 2012 Budget outlined a six-year plan to balance the Province’s budget by 2017/18. This was confirmed in the October 2012 Economic Update and Fiscal Review. Most candidates have committed to meet at least the timetable in the current fiscal plan over the remaining five years between 2013 and 2017.

As a candidate to be Leader of the Ontario Liberal Party, Glen Murray believes that all who seek the leadership should show how they will make the decisions needed to meet or exceed the targets in the current plan.

This is imperative because the fiscal plan is a set of targets, especially for the years 2015 through 2018. It’s not a set of approved budgets.

It’s not good enough to say “we’re going to stay the course.” While that’s important, we need to do more. To meet these targets the next Premier and Liberal government will need to make many decisions about priorities and programs beyond just a general commitment.

Alone among the candidates, Glen Murray believes that the only way to maintain the legacy of the McGuinty years AND build the next Liberal legacy is to chart a new economic and fiscal course.

Glen Murray’s Plan

I. Renewing And Re-Focusing Our Tax System

Renewal of government cannot be limited only to the $117 to $119 billion in annual program spending in the projections for 2013 through 2018. Public policy goals supported and delivered through “fiscal expenditures” — refundable and non-refundable credits, deductions, exemptions and other tax measures — total more than $25 billion, which is more than 20 per cent of the Province’s annual program spending.

A new Liberal Government led by Glen Murray will review our entire system of tax deductions, exemptions, credits and differential rates to focus them on building the economy we need. Glen Murray’s plan will re-focus almost $28 billion in existing tax breaks to help the small and medium businesses and middle- and moderate-income singles and families who are the foundation of our economy.

We will start with the treatment of Registered Retirement Savings Plan and Child Care deductions that cost over $2.3 billion in 2009. For middle income Ontarians these are often seen as the main or only ways to try and increase the annual tax refund. In practice, for many, however, the real tax savings can be much lower than most realize. To focus tax relief on those who need it, these deductions will be converted to grants.

A Glen Murray government will also mandate the Standing Committee on Finance and Economic Affairs to conduct a public review of all non-refundable credits, deductions and exemptions. Totaling more than $20 billion, the costs and benefits of personal, corporate and sales tax items will be made available for broad review by all Ontarians through an on-line policy-wiki forum that will allow for the broadest possible consultation.  Credits like the Ontario Trillium Benefit and benefits like the Ontario Child Benefit would be excluded from this review.

Starting with those credits, deductions and exemptions that are more than 10 years old, the review will be mandated to identify 20 per cent for elimination, with 20 per cent of the recovered revenue dedicated to deficit elimination and debt payment and 80 per cent dedicated to new tax reductions for small and medium businesses and tax reductions and benefits for modest- to middle-income earners.

II. Acting on Drummond Recommendations

The Drummond Commission provided a roadmap with many valuable recommendations for keeping Ontario on the right fiscal track. For example, it called for taxing corporate income on a consolidated basis to ensure a fair allocation of income and losses across Canada and enhanced actions to ensure a fair playing field for all through streamlined, fair and timely collection of back taxes and enhanced measures to combat the underground economy.

As Premier, Glen Murray will act on these sound ideas, which can reasonably be expected to add up to $700 million per year to Government Revenues.

III. Recognizing Growth in the 2012/13 Tax Base

As reported in the 2012 Ontario Economic Outlook and Fiscal Review, Ontario’s actual tax base in 2012/13 was approximately $430 million more than anticipated in the 2012 Budget. The update also assumes annual growth in all tax revenue equal to 4.1 per cent per year. Allowing for the increased base and subsequent growth for the period through 2017/18 adds $2.2 billion to the current framework.  

IV. Growing the Tax Base through Innovation

As Premier, Glen Murray will focus tax incentives on innovative companies to foster the economic growth, higher-quality jobs and expanded tax base such companies generate. Glen’s plan was detailed in a backgrounder dated December 5, 2012, which was lauded by top Ontario business leaders and thinkers such as Raphael Hofstein, President and CEO, MaRS Innovation, John Ruffalo, Chief Executive Officer, OMERS Ventures/Venture Capital and Roger Martin, Dean of the University of Toronto's Rotman School of Management.

Glen Murray’s plan will cost the Ontario Treasury just under $270 million per year. Based on the experience in other jurisdictions with comparable incentives the new tax revenue from enhanced business activity can be reasonably expected to be almost $590 million per year.

V. Smart Government - Agencies

As Minister of Training, Colleges and Universities, Glen Murray eliminated almost 50 classified agencies. This lead to a 20 per cent reduction in the number of classified Agencies, Boards and Commissions in Ontario which now number under 200.

Glen Murray’s Smart Government recognizes that useful public bodies can outlive their original purpose or sometimes better fulfill their mandate if common administrative functions are centralized. Current legislation provides a model for administrative re-organization of Ontario’s agencies through “clustering” to achieve administrative savings.

As Premier, Glen Murray will extend the clustering model, noted positively by the Drummond Commission, to drive savings among government agencies, reducing the number of these classified agencies by a third over three years.

Savings and efficiencies will arise by reducing the number of government agencies and administrative corporations — such as energy companies, transportation authorities, regulatory and health agencies. A Glen Murray government will also review both the Ontario Lottery and Gaming Commission (OLG) and the Liquor Control Board of Ontario (LCBO) to create more innovative and leaner organizations focused on maximizing return on investment and building community and private sector partnerships.

Regulatory, labour and adjudicative Agencies that regulate or decide purely private disputes will also move to a full cost-recovery model. They’ll have to pay their way. This will mean the elimination of $105 million in annual operating subsidies, according to the most recent Public Accounts of Ontario.

The portion of criminal and civil fines dedicated to Victims Services will also increase until these fines cover fully the cost of Victims Services provided in Ontario.  Based on the most recent Public Accounts of Ontario this will require an increase of just over $60 million.

VI. Smart Government – Better Local Partnerships

Whenever possible, decisions and accountability should be local. As Premier, Glen Murray will work with municipal partners to simplify the pre-existing relationships that see local governments and services annually deliver over $12.7 billion of provincially funded programs in public health, tourism, social services and sports and recreation.

Multi-year service agreements will be developed and technological innovations will come into force to simplify accountability and reporting. At present, the province spends over $434 million to administer these programs.

A Glen Murray Government will reduce the provincial overhead cost by at least 50 per cent while ensuring transfer levels for actual programs remains at least constant.

VII. Smart Government – Better Community Partnerships

Longstanding community partners deliver cultural, employment training and immigrant settlement services totaling almost $1.5 billion in provincial transfers.

Multi-year service agreements will be developed and technological innovations brought in to simplify accountability and reporting. Right now the province spends almost $120 million to administer these programs.

A Glen Murray government will reduce the provincial overhead cost by at least 50 per cent while ensuring transfer levels for actual programs remains at least constant.

In addition to improving existing relationships, a Glen Murray government will also build new and dynamic relationships with community-based social activists. We will establish a “crowd sourcing” policy for social capital, and we’ll bring in a Social Venture Exchange and create social impact investment programs. This will allow not-for-profit organizations, civil society organizations and social enterprises to create employment through better choices for unemployed and underemployed people.

Glen Murray will also establish a “Premier’s Social and Economic Justice Task Force” to support efforts to take a new approach to social assistance that enables easier transitions from Ontario Works and ODSP to employment. Building on the guidance of the Commission for the Review of Social Assistance in Ontario, we will establish a benefits package for the working poor, which will support low wage workers.

The Task Force will be mandated with an ambitious target: transition 20 per cent of people on social assistance into new employment and independence within 5 years.

VIII. Smart Government – Central Administration

Central administration of Ministries — head office staffing — costs more than $800 million. Efficiencies in the management of these central functions is a prime area for reducing costs through greater use of technology and innovation to allow the government to enhance productivity.

A Glen Murray government will mandate a reduction of 20 per cent in these central staffing functions over five years, through attrition as existing staff retire, to achieve permanent annual savings of $160 million.

IX. Smart Government – Renewal in the Broader Public Sector

Staffing and benefit costs in our hospitals, colleges and school boards total $37 billion and account for over 80% of the costs in these sectors. Similar costs in our Universities total an additional $5 billion for total staffing costs in the broader public sector of $42 billion.

As staff retire there is a unique opportunity to re-focus current resources on the front line services that Ontarians count on. A Glen Murray government will use vacancy management programs to create the transition machinery to introduce technology and improve technology in our schools, post-secondary institutions and health care facilities.

As Mayor of Winnipeg, Glen Murray used this approach to maintain service levels while reducing government operational costs. Successfully used in Saskatchewan, Alberta, Australia, Ireland and the United Kingdom, vacancy management approaches are a proven way to drive efficiency without compromising the services used by people.

This approach can generate savings of at least 5 per cent after five years without reducing service levels or compromising collective agreements.

To enhance front line services, a Glen Murray government will dedicate 80% of the savings from this approach to create a $5.1 billion “Health & Education Innovation Fund” to improve front-line health and education services.

X. Smart Government – A 21st Century Government

It’s time for systematic renewal of the Ontario Public Service. As Premier, Glen Murray will introduce a technology and productivity initiative to transform the Ontario Public Service from a 20th century analogue government to a 21st century digital high-performance government. He will also act on ideas to centralize the administration of government functions.

• Digitalized government identification cards can simplify the experience of citizens dealing with the government and also save taxpayers’ money.  A Glen Murray government will eliminate plastic OHIP health cards, drivers’ licences, and fishing and hunting licenses which can be replaced by electronic PIN protected Government Services Cards. These will allow citizens to easily and quickly access and transact government services — one-stop digital shopping.

• We’ll eliminate perverse subsidies that support pollution and waste in the economy. Engaging the Canada-based International Institute for Sustainable Development to lead this process, a Glen Murray government will ensure that Smart Government is also Clean and Sustainable Government.

XI. Smart Government – Centralized Services

As proposed by the Drummond Report, centralizing the government collections process can save an additional $200 million per year.  

A centralized procurement strategy proposed by my colleague Harinder Takhar, is also worth pursuing to ensure the lowest costs for fleet purchases, information technology (IT) spending and other large-scale recurring expenses. An annual savings of at least $250 million is a reasonable target within three years.

Smart Government Savings

XII. Prudent Government — Prudent Contingencies

The challenging economy requires prudence.  

In addition to the existing contingency provisions in the budget, a Glen Murray government will add additional contingency reserves equal to the projected new tax revenues from the higher 2012/13 tax base and the projected new tax revenue from the innovation agenda.

XIII. Conclusion

The Hudak PCs want to turn back to the chaos and conflict of the Mike Harris years and the failed policies of the U.S. Tea Party, which would wreck our schools and health care. The NDP have no plan — they don’t understand the fiscal challenge and don’t know how to say no to unions and special interest groups, which would undermine investors’ confidence and lead to the same result.

Only Ontario Liberals have the capacity to tackle the fiscal challenges faced by our province while standing by families, working to grow our economy and creating good jobs.

And among the candidates for our next Leader, only Glen Murray has a comprehensive plan to meet the challenges and sustain the McGuinty legacy.

It’s time for the next chapter — for renewal, with a Glen Murray Ontario Liberal government.