Special Report: Light Rail

Ontario NDP Waging War on Public Investment

Rather than supporting The Big Move in the service of something we might call the public interest, Andrea Horwath's NDP has re-politicized the issue and, quite possibly, doomed it in the process.

By Simon Kiss
Published March 13, 2014

Public transit remains a crucial policy issue for the province of Ontario, but it is not clear that citizens will get good solutions any time soon.

Investment in public transit is expensive, often requires raising taxes and can get bogged down in the nitty-gritty politics of neighbourhood planning, not to mention partisan competition.

In 2007, the government of Ontario tried to turn over province-wide planning for public transit to an arms-length agency, Metrolinx, in part to take the politics out of the issue. Its plan, the Big Move, is the result of years of study, planning and consultation. But its fate is questionable.

Because the Progressive Conservatives have effectively boycotted the political negotiations that characterize minority parliaments, the Ontario NDP and Liberals are currently driving policy and politics in Ontario.

Sadly, the negotiations between these two parties appear to have signed the death warrant for the desperately-needed investment strategy in public transit that Metrolinx has developed. If the Big Move didn't die this week, it is on life support. And if it goes, so does Hamilton's B-Line Light Rail Transit (LRT) plan.

Revenue Tools Rejected

In a March 10 interview with Hamilton Spectator columnist Andrew Dreschel, Ontario NDP leader Andrea Horwath left the impression that she favoured increasing corporate taxes to pay for increased investment in public transit in Ontario, particularly for the Big Move.

But by March 12, Dreschel published a correction to his column, noting that the party currently does not support raising corporate tax rates, but rather just favours closing some corporate tax loopholes.

Today, the Globe and Mail reports that Ontario Premier Kathleen Wynne has rejected the proposal to increase the HST or the gas tax to invest in transit.

These two developments mean that the Big Move - and Hamilton's LRT - are nearly dead in the near term. The second wave of transit projects in the Metrolinx development strategy is ambitious and had a cost associated with it of roughly $2 billion per year. The proposed list of tools to pay for this is in this table. The current political status of each is also listed.

Status of Proposed Metrolinx Revenue Tools
Proposal Cost Status
1% increase in the HST $1.5 billion Initially rejected by Horwath, today rejected by Wynne
Regional gas tax $330 million Initially rejected by Horwath, today rejected by Wynne
Development Charges Amendments $100 million On the table
Parking Space Levy $350 million On the table

$2 billion is needed to fund the projects and more than $1.5 billion of that is now gone.

NDP Revenue Plan

The NDP's constant alternative has been that the "average" family should not have to pay for transit, but that "corporations" should. What most people - including Andrew Dreschel - hear when Horwath says this is that the corporate tax rate would go up.

However, what they are now saying they mean by this is that the NDP does not plan to actually raise corporate taxes. Instead, it plans to not implement some planned exemptions to the HST starting in 2015 and ending in 2018. You can read their plan [PDF].

This all goes back to the implementation of the HST in 2009. The whole point of that proposal was to make the tax system more efficient, so the tax was not to be levied on business inputs.

However, certain controversial expenses (e.g. entertainment and meals) were exempted from this. These exemptions start to expire in 2015 and fully expire in 2018. So when the Ontario NDP says that it wants to raise corporate taxes, what it really says is that it plans to close loopholes that do not currently exist.

The party calculates that this could raise (sorry, prevent the loss of!) $1.3 billion annually by 2018. That's 2018, not 2015. In addition to this, the party expects to reap an extra $300 million attributable to increased compliance because they're going to get tough on corporations and from a few other measures.

If we're generous to the NDP, we can count that $1.6 billion as revenue.

Let's further assume that Horwath can find it in herself to support the two remaining revenue tools from Metrolinx' revenue tools (development charges and the parking space levy and add those to the mix. That means, we're looking at something like this for fiscal year 2018.

Hypothetical NDP Mix of Revenues
Proposal Cost
Preventing lost revenue $1.6 billion
Parking Space Levy $330 million
Develpment Charges $100 million
Total $2.03 billion

So, in this generous scenario, Horwath can still claim that she can cover the cost of the Big Move without the other investment tools.

Except for two big problems.

Two Big Problems

First, this only starts in 2018, not in 2015. Second, this only works if one assumes that every single cent of this already generous vision of increased revenues from businesses goes straight to transit. Not a cent of this can go to address poverty, address waiting lists in hospitals, address the fact that Ontario has the lowest rate of per-student funding for post-secondary education in Canada or address the fact that we still do not have a public and accessible child care system in this province.

This is not plausible. Those are important priorities and the interest groups that represent them are at Queen's Park right now trying to make the case for their priorities.

At this point, one way of resurrecting the Big Move would be if Wynne were to propose increasing the corporate tax rate in the negotiations to the budget. Maybe in such a scenario, Horwath might step down from her Rob Ford-like aversion to tax increases to cover some of the revenue. Time will tell.

What is certain, however, is the following:

There is a pressing public policy problem facing the citizens of Ontario. The provincial government wisely attempted to depoliticize the issue by handing over proposals to a technocratic and non-partisan body.

Rather than supporting that public intervention in the service of something we might call the public interest and concentrating on fighting an election on, say, the fact that the provincial government has mismanaged the electricity file in a horrible way, the NDP has re-politicized the issue and, quite possibly, doomed it in the process.

NDP War on Taxes and Public Services

When I joined the NDP in Alberta in 1993, the party had just been eliminated from the Alberta legislature and reduced to nine seats in the Federal House of Commons. I probably joined partly out of a deep personal tendency to support the underdog, but I also joined the party because it didn't seem right to me that the public sector was being framed as the source of all the problems in our society.

It seemed to me to be important to defend the idea that public solutions to problems are often more efficient than strictly private solutions. The Ontario NDP has nothing to do with that.

I still identify as a New Democrat. Somewhere, I'm pretty sure you can find an Ontario party membership card. But I'm sitting this one out. Andrea Horwath can wage war on taxes and public services without my money, my time or my vote and I strongly urge other Ontario New Democrats to do the same.

Simon Kiss is a political science professor at Wilfrid Laurier University.

11 Comments

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By brendansimons (registered) | Posted March 13, 2014 at 19:58:41

The NDP lost my support when they opposed the federal Liberal's planned carbon tax. That was sound policy that would have made a real difference in our contribution to Climate Change - one of the NDP's principles. Instead, Layton chose to cynically oppose it on "no new taxes" grounds, in order to wedge himself from the liberals. Horwath is running the same play here. Who cares about real policy when populism takes votes away from your opponent.

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By Noted (anonymous) | Posted March 13, 2014 at 22:07:59

During the 2011 campaign, NDP proposed a corporate tax roll-back in order to HST at the pumps.

theglobeandmail.com/news/politics/ontario-ndp-leader-promises-cut-to-hst-on-gas-prices/article584548/

Somewhat perverse that the same mechanism would be used to fund transit infrastructure, no?


The parking levy promises to be an entertaining dance, considering that Cadillac Fairview is wholly owned by the Ontario Teachers Pension Fund.

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By LCD (anonymous) | Posted March 14, 2014 at 01:17:08

The NDP had better hope they can win over a lot of Toronto Sun readers to vote them because, as you state, they're turning off a lot of their traditional core. Like you, I've supported them for years (30+) but now find myself questioning how they intend to achieve a thing if they can't come up with better than populist bonhomie for policy positions. We face real problems that need real solutions (maybe even tolls or taxes), and I, for one, am starting to think the Libs are the only crew actually ready to do the research to find the best alternative --- if only they could screw some nutz on, sell the reasoned findings, and not waffle down to LCD with the rest of them. It's pretty bleak choice on the political front today.

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By highwater (registered) | Posted March 14, 2014 at 10:37:39 in reply to Comment 98428

They have two traditional cores: the unions and urban progressives. As we've come to the realization that endless consumption, sprawl, and car-based land use and transit planning are economically, environmentally, and socially unsustainable, the interests of their traditional core voters has diverged. They had to choose and they chose the unions. I'm sure they did lots of number crunching before they made their choice. Urban progressives obviously don't bring as many votes, campaign dollars, and boots on the ground as the unions. Now that they've narrowed their base, they're not about to do anything that will discourage the continued production of cars and residential home construction.

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By AP (registered) | Posted March 14, 2014 at 08:24:23

A difficult balance this being a politician; to do what's best for the communities you represent or to do what's most likely to get you re-elected.

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By AnjoMan (registered) | Posted March 14, 2014 at 14:35:59 in reply to Comment 98434

Its pretty sad that politicians have to make that choice. Why aren't these interests aligned?

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By Noted (anonymous) | Posted March 14, 2014 at 08:48:46

The "Crackdown" NDPDF is from January 2013. It was released during the prorogation, in advance of the installation of Premier Wynne. Hence the URL syntax:

ontariondp.com/en/wp-content/uploads/2013/01/BackToBusinessAtQueensPark.pdf

This is also why their "fiscal impact" estimates on page 2 start with the 2013-14 budget year. If the proposed implementation timeline were included to the 2014-15 budget, the reclaimed $1.3 billion would actually arrive FY 2019, under the best case scenario.

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By Dooner (registered) | Posted March 14, 2014 at 12:19:14

Although some of your criticisms are valid, I'd encourage you to rethink the idea that the Metrolinx conclusions are the only way forward. The Big Move is far from dead, and there are lots of other options.

Some of them can be found if you dig deeper into Metrolinx's own work. See p. 35-36 here: http://www.metrolinx.com/en/regionalplan... which recommends a mix of corporate & personal income tax & a parking levy.

Also, your numbers on the parking levy are iffy - Metrolinx recommended a 25 cent average parking levy, but a $1 levy would raise $1.4 billion... somewhere in between seems reasonable. I think you're also leaving out the NDP's "fairness" tax (on incomes over $500,000), which the liberals want to cancel, and earns $500 million in revenue. Agreed that the NDP are crazy if they think they can't raise the corporate tax rate. But I expect that what they're angling for during the minority government is different than what they'll put forward in an election. Time will tell.

Basically, there are lots of ways to raise revenue for transit and everything else. Hugh McKenzie at the CCPA has done some great work on this: http://behindthenumbers.ca/2014/02/03/ta... We're also not spending nearly as much on transportation & transit than other provinces: http://martinprosperity.org/2013/08/28/y... There's also the context of implementing regressive taxes while more progressive taxation has only recently been abandoned. Here's a better rundown of the NDP's position, I think (although it also leaves some questions): http://rosariomarchese.ca/not-fair-to-cu...

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By samuel (anonymous) | Posted March 14, 2014 at 12:51:33

all this idiocy because of FPTP

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By KevinLove (registered) | Posted March 14, 2014 at 20:58:48

What the article fails to mention is the critical Hamilton connection: Andrea Horwath is MPP for Hamilton Centre. That is the riding that I live in, so I get to be one of the few people in Ontario that can actually vote for or against her personally.

Andrea Horwath's policies are in direct contradiction to the interests and values of what I would like to believe are an absolute majority of her constituents. Who would benefit from the B-line, and absolutely do not benefit from car drivers launching lethal cancer poison attacks upon themselves and their children.

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By Alex (anonymous) | Posted April 20, 2014 at 21:59:06

Great, thanks for sharing this article.Thanks Again. Great.
Alex

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