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Tuesday, April 13, 2010

Ontario's Salary Freeze

The 2010 Ontario budget has been presented and, in an era of provinces pulling themselves into recovery after battling the effects of the recent, economy-crushing recession, Ontario has delayed efforts to balance the budget. In fact, Ontario's budget is not projected to be back in the black until 2017-18. Instead, the provincial government has presented a budget that contains a whopping $110 billion in deficit spending over the next eight years. To offset this spending, the province has imposed a salary funding freeze for more than one million public sector employees.

And, thus, the battle lines have been drawn. In Ontario, more than half the government's spending is public sector compensation. The government is attempting to rally public opinion to support its decision, claiming that the public employees will certainly agree that a salary freeze will help pave the way for a brighter future. However, the unions see the decision as the opening volley in negotiation battles that will not be easy.

Ontario is not the only province juggling deficits. It does seem, though, to be the only province that is not tackling the issue head-on by slashing spending. One reason given is the fact that elections are on the horizon in 2011. Reducing spending would entail cutting the public labour force, which would be the responsible move, but would ultimately cost the Liberals votes at the polls.

Critics point out that an alternative savings would be a repeal of a corporate tax cut. But, it is easier to take the money from low-paid workers, many of whom are women.

There has been a good deal of criticism regarding irresponsible government spending. This past summer, the Liberal government came under fire for wasting more than $1 billion on the eHealth system. Designed to develop electronic health records, the only major winners of eHealth were the contracted consultants.

The steady increase of six-digit government salaries has also come under attack. The opposition parties point out that the Liberals really have done very little to keep government spending under control.

It would appear that the province's ailing economy is truly in need of a vital recovery program before the illness gets worse.

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Sunday, April 11, 2010

Ontario's Hidden Green Tax

If you reside in Ontario, you already know that Canada Day 2010 will also hail the inception of Ontario's new 13% Harmonized Sales Tax (HST). What you may not know is that you are most likely to begin paying another new tax as early as May.

While yet not formally announced, the Liberal government will be imposing a new levy on hydro bills throughout the province to help cover $53 million of the government's conservation and green energy program. Opponents of this measure call the levy a hidden tax that is unnecessary. While the Liberals claim that the average hydro bill will only increase by $4 annually, this claim fails to acknowledge that the HST will already increase hydro bills by an additional 8%.

Defending their decision, Liberals maintain that the only alternative is to continue operating the province's energy system by burning coal, thus contributing to an unhealthy environment. The money from the levy would pay for home audits and institute a program to help industrial and commercial firms convert to solar power. The focus of the program will be conservation, rather than merely converting to new infrastructures, which could prove to be extremely costly to taxpayers.

Critics of the government's green plan question whether all the affordable conservation options have been investigated, rather than turning immediately to the consumers' pockets. The most effective program would be one that will help the maximum number of hydro users conserve. Furthermore, producers of "green power" appear to be the prime beneficiaries of this new program, as opposed to actually transforming Ontario into a "green" province.

Whether the environment will win or lose in the long term is still most uncertain. What is certain, though, is that Ontario residents will begin paying more for hydro in the near future. Hopefully, they will be investing in their environment, not just in their government.

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