People, people, people. Wynne's budget plan and Hudak's budget plan are very different.
Hudak's idea was to quickly cut spending to reach balance in 2016, and cut revenues as well by reducing tax rates. What would that mean numbers-wise? Hard to know, but here's my analysis:
In 2013-14, Ontario had $116.4B in program spending, $10.6B in debt servicing costs, and $115.7B in revenue, for a net deficit of $11.3B. The stillborn 2014-15 budget (soon to be reintroduced!) projects revenues of $118.9B. Hudak's version of the 2014-15 budget would have likely been around $117B or so, as it lacked some of Wynne's tax hikes plus included a corporate tax cut. Wynne projects $5B a year increases in revenue owing to the US recovery (unaffected by Hudak), infrastructure stimulus effects (much less with Hudak), and background economic growth (likely reduced with Hudak given austerity measures). That means under Hudak revenue increases would be, say, $4B a year instead of $5B a year under Wynne. Meaning by 2016-17, we'd be at $125B. With debt servicing costs of around $13B (by then), that means program spending would have to be $112B in 2016-17 to hit balance. That's about $4B less than last year's spending levels, amounting to about $1.3B a year of spending reductions in each of 2014-15, 2015-16, and 2016-17.
Wynne's proposal is to increase program spending to $119.4B in 2014-15, increasingly slightly to $120B in 2015-16 and retaining that $120B in 2016-17, then cutting back down to $119.4B in 2017-18. Spending is kept essentially the same, with revenue growth eating into the deficit over time.
So, here's the summary:
-Under Hudak, spending would have been $4B lower than what it is today when the budget is balanced in 2 years--revenue and expenditure will match at about $124B.
-Under Wynne, spending will be about $3B higher than what it is today when the budget is balanced in 3 years--revenue and expenditure will match at about $135B.
Wynne will have to have spending restraint but much less than Hudak. Plus her plan is very easy for ministries to work with. They can simply shift spending from future budgets into the current one. For example a hospital can use their increase in 2014-15 to buy more than one year's worth of equipment this year allowing them to spend less on equipment in the next few. If its done right, the spending restraint could be practically invisible to the public. Hudak's plan would have made that kind of planning impossible. Note that McGuinty in his last few years managed to shave some $6B off the deficit without any noticeable decline in public services.
And, even if Wynne's revenue growth numbers prove to be too optimistic, guess what--her budget plan actually incorporates $1.2B each year of "cushion room" in case revenue growth fails to meet required levels.
This approach--increase spending short term to focus on highly stimulatory things like infrastructure and fix up existing funding shortfalls, followed by several years of spending freezes--was (ironically enough) the very successful strategy the federal government just used to balance its budget.
