Ontario expects $1.3B deficit, to post surplus in a year
TORONTO — Ontario plans to start posting budget surpluses in a year, leaning heavily on booming revenues to outweigh increased spending on health care – which includes boosts to hospitals, home care and the medical workforce.
Finance Minister Peter Bethlenfalvy said his nearly $205-billion plan released Thursday shows that the province can spend responsibly.
"We are showing it is possible to balance a budget while investing more in housing, more in highways, more in transit, more in the skilled trades, more in new manufacturing, more in health care, more in education, more in the north," he said in the legislature.
In the fiscal year starting next month, Ontario expects to run a $1.3-billion deficit, before eking out a small surplus of $200 million in 2024-25, followed by a $4.4-billion surplus the following fiscal year.
Finance officials say that progression is partly due to increasing revenues – Ontario expects to end this year with about $200 billion in revenue, more than $20 billion higher than it projected at this time last year – thanks to higher-than-expected levels of inflation and economic recovery.
But those windfalls aren't leading to new affordability goodies at a time of high inflation, aside from boosting a program for low-income seniors.
Bethlenfalvy said the government didn't wait for the budget to introduce measures such as a gas tax cut, low-income tax credit and increase to disability support payments.
"We're doing a bunch of things," he said. "It's not just one and done."
NDP Leader Marit Stiles said Ontarians are struggling to keep up with the rising cost of groceries, rent and gas and this budget fails to meet the moment.
On the expense side of the ledger, Ontario continues its infrastructure-heavy plans with more than $20 billion in highway, hospital and transit projects. The province is also putting an additional $75 million over three years in its Skills Development Fund and $224 million to build and upgrade training centres, as it seeks to ensure there are enough workers to implement its plans to build.
Meanwhile, as it deals with pandemic backlogs and health worker shortages, the government is increasing hospital funding by four per cent and spending more than half a billion in home care in the upcoming fiscal year.
The government had promised in the last budget to put $1 billion over three years into home care, and is announcing in this budget that it is speeding up that funding, with $569 million in 2023-24.
Ontario is also earmarking an additional $425 million over three years for mental health and addictions services, including to fund community programs, youth wellness hubs, and support children and youth with eating disorders.
The health-care sector, like many across the province, has seen labour shortages become particularly acute over the past year, with hospitals pointing to a lack of nurses as the reason for temporary emergency room closures.
The budget puts $200 million toward addressing immediate staffing shortages including a program that sees health-care students work in hospitals to gain experience as well as a supervised practice experience program for internationally educated nurses.
The province has also seen high patient volumes in emergency rooms and paramedics waiting longer to offload ambulance patients. The situation became so critical at points in the past year that many communities have seen periods in which no ambulances are available. The province is adding $51 million over three years to a dedicated offload nurses program, in order to free up paramedics.
Another $22 million is being used to hire up to 200 people to provide mentorship, supervision and training to new nurses. As well, $15 million will be spent to keep 100 mid-to-late-career nurses working, though officials didn't detail exactly how that money will be used for retention.
Ontario is also spending $80 million over three years to shore up future health-care staffing by increasing post-secondary nursing program enrolment. As well, the province is adding 154 post-graduate medical training spots and 100 seats for medical undergraduates.
The budget reveals that Ontario will be spending $72 million in the upcoming year to expand publicly funded procedures at private clinics – a plan the government has said will help reduce wait times, but which critics have said undermines the public health-care system.
Teachers unions said education got short shrift in the budget. While there is a $2.3-billion increase to base funding, the Ontario Secondary School Teachers' Federation said the government is receiving a lot from the federal government to fund the $10-a-day child-care plan.
"At this point, it's crystal clear that this government will continue to sacrifice the high-quality education system that Ontarians expect and deserve in order to advance their own corporate agenda," president Karen Littlewood wrote in a statement.
There are few new affordability measures in the budget, but the government is expanding the Guaranteed Annual Income System, which provides payments to low-income seniors. The government plans to introduce new criteria that would see about 100,000 more seniors eligible for the program starting in July 2024, and the benefit will be indexed to inflation.
Ontario also points to inflation as one reason for increasing reserves on the books. This budget has $1 billion set aside in reserve, but that rises to $4 billion in 2025-26.
Ontario's real GDP is projected to increase by just 0.2 per cent in 2023, though the rate is expected to pick up in subsequent years.
The province's contingency fund for 2023-24 is set at $4 billion. As the end of this fiscal year quickly approaches, about $1.75 billion in this year's contingency fund is left unspent. Ontario's fiscal watchdog has been critical of what he called this government's unusually large contingency funds, saying that type of accounting is not transparent.
Net debt is projected to surpass the $400-billion threshold for the first time in the upcoming year.
The Ontario Chamber of Commerce said the government's efforts to address labour shortages in health care and the skilled trades are welcome investments, as well as spending on manufacturing and mining.
"We appreciate the government’s focus on fiscal responsibility while maintaining growth-enabling investments that support greater productivity," president and CEO Rocco Rossi wrote in a statement.
This report by The Canadian Press was first published March 23, 2023.
Allison Jones, The Canadian Press