November 27, 2014

Does The Ontario Liberal Government Understand The Concept Of Subsidies?

For months, the Liberal government has referred to Ontario horse racing’s
share of the slots-at-racetracks partnership as a “subsidy”. One MPP, who is
featured in the May issue of Trot Magazine, wonders if Ontario’s
Finance Minister truly understands the subsidy concept.

In the May State Of The Industry issue of Trot, MPP Jeff Yurek is
featured in an April tour of the Dorchester Downs Training Centre in his riding
of Elgin-Middlesex-London. The article notes Yurek’s confusion over the
government’s decision to end the partnership with racing, noting it’s very much
an asset to all parties involved.

On Monday in the Ontario Legislature, Yurek stood up for horse
racing by asking why the Liberal government has consistently refused to call the
slots-at-racetracks deal a partnership while using the word “subsidy”.

As Yurek points out, a government uses tax money to subsidize a program or
business. Horse racing does not and has not received any money from taxpayers in
the slots-at-racetracks deal, yet the entire Liberal Party – including Premier
Dalton McGuinty and Finance Minister Dwight Duncan – have painted horse racing’s
share of the arrangement with the subsidy brush.

The following statement comes from Monday’s House of Commons transcript, as
MPP Yurek addressed the fiscal health of the province.

Despite all this, the Liberals are trying to sell this budget as their cure,
their tough medicine that will send us down the road to a balanced budget and
prosperity. It is no doubt the reason that the Liberals titled their budget
Strong Action for Ontario, and yet when we get into the details, there’s nothing
all that tough or strong about it. The McGuinty government’s favourite tactic
is, promise to take action tomorrow without having to take real action
today.

I think one of the problems is that the Minister of Finance just isn’t
understanding finance. For instance, up until yesterday, the government was very
adamant about cutting the so-called subsidies to the horse racing industry. When
you use the term “subsidy,” this sounds like a very reasonable thing to do.
After all, a subsidy uses money collected through taxes and puts it forward to
some program or business. If, in fact, the government is paying the horse
industry a subsidy, cutting it would enhance the province’s fiscal position. But
I have just one question for the Minister of Finance: Does the government use
tax revenue to subsidize the horse industry through the slots-at-raceways
program? The answer is no. I would hope the government realizes this, because
the agreement between the OLG and the horse industry is very clear. The horse
industry does not receive a dime until someone inserts a coin into a slot
machine located at their track. This is not a subsidy; it’s actually a
revenue-sharing agreement.

I’m sure the minister will tell me he has made some responsible concessions.
The reason I bring this up is because before the budget was released, the
Minister of Finance made the slots-at-raceways program a very big and public
issue. Given the amount of time he has dedicated to talking about it, one would
be forgiven for thinking that this one measure in itself might balance the
budget.

He tried using an example of how the government was going to prioritize
health care and education over less pertinent items. In all his tough talk, the
minister failed to mention how he would make up the $1 billion in profit the
government receives from the program. That’s right. One program, the
slots-at-racetracks program, is not a subsidy, but it actually is providing $1
billion that is used to fund essential services like health care and
education.

This is our Minister of Finance: someone who doesn’t know the difference
between an inflow and an outflow, a subsidy from a revenue-sharing agreement.
This is the man in charge of the province’s finances, a man who would cut a
revenue source that provides $1 billion each year just because he doesn’t know
the definition of the word “subsidy.” It’s either that or all the minister’s
talk of horse racing was less about actual finance but instead a political game
he was playing to stick it to rural Ontario.”

(Standardbred Canada)