RMP caps and new costs

Wednesday, March 28, 2012

by SUSAN MANN

The provincial government is capping Business Risk Management program spending at $100 million this year, according to the Ontario budget delivered Tuesday at Queen’s Park by Finance Minister Dwight Duncan.

In addition, Ontario is again asking the federal government to support the province’s farmers by funding its 60 per cent share of the business risk management program, the budget says.

“Farm income support programs are a source of financial risk to the province as payments can be unpredictable,” the budget says. The agriculture ministry will work with farmers to reshape these programs, including the business risk management program, through a capped program structure to limit financial exposure and leverage federal dollars.

Lorne Small, president of the Christian Farmers Federation of Ontario, says they’re prepared to work with the agriculture minister and his staff to “live within the cap” and to improve the program.

“If there are ways of incorporating productivity improvements into the risk management program, then we’re delighted to work with them,” Small says, noting he’s encouraged by the government’s willingness to work with farmers on program improvements.

Small says he isn’t sure when the program improvement work would start. Sign up forms for this year’s program have already gone out.

Cap consistent with other tax relief freezes
Plamen Petkov, spokesman for the Canadian Federation of Independent Business, says the government committed $100 million to the program last year so this year’s commitment means it isn’t putting additional money into it.

“Our concern here is the cost of the program fluctuates so what our members would like to see is a timely, predictable and transparent risk management program,” he says, noting that even though Ontario is still trying to get the federal government to contribute it isn’t certain they will.

The federation sees the cap as a measure consistent with some of the other tax relief freezes the government announced Tuesday, including corporate income tax and business education tax reductions, he says.

Progressive Conservative agriculture critic Ernie Hardeman says he has concerns about the provincial government’s plans to tinker with the program. “It’s only been in place one year.” Farmers helped develop the program currently in place and the government agreed to implement it.

Changing it “would take it away from being an insurance program and it would become just a government program,” he says.

Rather than capping total program spending, National Farmers Union Ontario coordinator Ann Slater says they’d rather the government limits the amount that goes to any one farm. She says they don’t have a figure in mind. “We have research that shows that since the early 1990s the bigger portion of government program money has gone to the larger farms and less of it is going to smaller, family farms.”

Efficiencies another word for staff cuts?
Other measures in the budget are modernizing agriculture ministry research and innovation programs and the ministry plans to do several internal reviews to enhance productivity. Potential areas for review include a comprehensive look at how services are delivered, transfer payment accountability and the operations of Agricorp. “As a result the ministry expects to improve the efficiency of service delivery,” the budget says.

Slater says the talk about making the public service more efficient means having fewer people. “I think we’ve got to the point in agriculture where we’re really losing ministry people on the ground and that doesn’t serve farmers well.”

It also means farmers have fewer independent advisers available to them. A lot of advice and research knowledge is now coming from advisers working for companies with products to sell, she notes.

Western University Prof. Dave Sparling, chair of Agri-Food Innovation at the Richard Ivey School of Business, says without the federal government on board to fund its share of the business risk management program “it’s probably not going to last unless Ontario just wants to keep going on their own.”

Capping the business risk management program isn’t a huge surprise, he notes, adding it isn’t going to be that painful for farmers because most of the markets currently are pretty good.

Water taking charges, higher energy costs
Sparling says there are measures in the budget that may lead to increased water and energy costs for food manufacturers and maybe some farmers. Water taking charges will be implemented for a broader range of industrial and commercial water users, including food producers and maybe even some large greenhouses.

On the energy side, the government says it will limit the 10 per cent Green Energy benefit to 3,000-kilowatt hours per month. Sparling says the result of that move is some of the bigger users will end up paying more for their energy.

Increased water and energy costs for food manufacturers could make them less competitive, “which then trickles down into the agriculture business,” he says.

Overall, Hardeman says, “it was a do nothing budget.” It doesn’t solve any of the problems the Liberals told “us we had.”

The government was supposed to eliminate the deficit by 2017/18 but Hardeman says there isn’t anything in Duncan’s speech or the budget document that does that.

But the government says it is reducing program spending growth and containing costs by $17.7 billion over the next three years while increasing revenues by $4.4 billion without raising taxes.

Hardeman says last year’s budget was $124.6 billion while this year it’s 126.4 billion. It’s going up by $2 billion and “that’s not what you call reining in the size and cost of government.”

Ontario Federation of Agriculture president Mark Wales wasn’t available for comment Tuesday evening. BF