Archived columns and blog posts by Matt Elliott

Horwath's plan to take HST off hydro bills makes no sense

By: Metro Canada Published on Fri May 23 2014

I learned a couple of things from watching Ontario NDP Leader Andrea Horwath unveil her party’s election platform yesterday.

The first is that she definitely has the most chant-friendly name of any party leader. There’s something about the three syllables in her first name — AN-DREE-AH! — that just works well when shouted out in unison by a group of supporters. She’s really got that going for her.

The second thing I learned is that her party’s platform has been shaped far too much by an entirely ill-advised plan to take the provincial portion of the HST off hydro bills.

There are a lot of bad policies being tossed around during this year’s provincial election, but the NDP pledge on hydro bills is one of the most baffling. Not only is it a decidedly non-progressive policy from a party that’s supposed to be all about progressive policies, it’s also enormously expensive — amounting to the biggest spending promise in the NDP’s platform.

Here’s a pie chart of the NDP’s planned investments, as detailed in the “Fiscal Framework” attached to the platform document. Since most of their spending ramps up over four years, I've used their figures for 2017-2018 to get a sense of what their promises would cost once fully implemented.

Taking HST off hydro bills is significantly more expensive than every other spending promise they've made. By focusing so much on this plank, the NDP has handcuffed themselves, leaving very little room to spend money on things that should be priorities — items like transit, healthcare and education.

People tend to forget that foregone revenue is the same as spending, but there’s little difference between the two on a government balance sheet. Both drive deficits and make it harder to balance budgets. By their own admission, the NDP HST plan amounts to spending — they call it investing — $815 million a year by 2017-2018. That’s a lot.

Now of course there’s nothing wrong with spending a lot of money if it provides enough tangible social or economic benefits to justify the expense, but this plan doesn’t seem do any of that. Instead, it looks like a regressive and inefficient response to a real problem.

Horwath’s party is right to point to the fact that some people in Ontario are having a hard time paying their hydro bills, but there are at least a half dozen more progressive ways to address that problem than simply cutting the HST for everybody. Since the HST is a percentage levied on the total cost, the NDP’s policy, in effect, saves a bit of money for the low-income person in a tiny apartment without air conditioning and a lot of money for the rich family in the 6,000-square-foot house with an indoor pool and a heated driveway.

No ill will against the rich family, but I don’t think paying the HST on their hydro bill is hurting them much.

A more progressive solution would involve government addressing real issues surrounding affordability in general. Because low-income Ontarians aren’t having problems paying their hydro bills solely because of the HST. It's because they simply don’t have enough money. Not for hydro and not for other things they need to survive.

With $815 million to spend, a progressive government could do a lot of things to help those people. They could implement tax credits. They could reform Ontario Works and the Ontario Disability Support Program to provide payments that don’t force people to live below the poverty line. They could implement programs offering solutions to some of the real barriers people face in finding employment — things like housing, mental health support or childcare. Hell, they could just straight-up design a program that guarantees poor people a basic income — an idea so crazy it just might work.

All are progressive ideas that should be attractive to a party that purports to represent the left side of Ontario’s political spectrum.

But all are also ideas we’re not hearing much about because the Ontario NDP is too focused on headline-grabbing policies like taking the HST off of hydro bills.

This post was originally published at on 2014-05-23T00:00:00.000Z

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Matt Elliott

City Hall watcher, columnist and policy wonk in Toronto.
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