Ontario premier Ford starts second term with many promises, less revenue

·3 min read
Ontario provincial election

By Anna Mehler Paperny and Fergal Smith

TORONTO (Reuters) - Ontario premier Doug Ford will have a long list of promises to fulfill after voters handed his Progressive Conservatives a second term in Canada's most populous province, even as he cuts taxes and fees, bringing in less revenue.

Ford's right-leaning party was projected to sweep back to power with a bigger majority, winning at least 83 seats in the 124 seat legislature, easily defeating his opponents in Thursday's election.

It was the culmination of what one observer called a "nothingburger" campaign that failed to galvanize voters: Turnout was the lowest ever for an Ontario general election, at 43.53% with 99.73% of votes counted, according to Elections Ontario. The previous lowest was in 2011, at 48.18%.

With Canadian inflation running at a three-decade high of 6.8%, Ontario faces an affordability crisis affecting everything from housing to groceries with few tools within the province's jurisdiction to address it, observers said.

Ford promised billions of dollars of new spending leading up to the election, on everything from highways to hospitals despite cuts to government revenue through measures such as a vehicle registration fee rebate and a gas and fuel tax reduction.

With a debt-to-GDP ratio of 40.7%, Ontario's debt load is higher than the next three most populous provinces and it pays more to borrow in the bond market. Investors have said getting the fiscal house in order should be one of the Ford government's priorities.

If the province faces a short-term fiscal crunch and doesn't want to raise taxes, "they may need to make their goals a little more moderate," said Carleton University economist Vivek Dehejia.

Marc Desormeaux, a senior economist at Scotiabank, said Friday he expected solid but slowing economic growth in Ontario over the next two years, with external factors such as borrowing costs, supply chain constraints and the war in Ukraine having a greater impact on the outlook than provincial policies.

"We’re encouraged by measures announced in the [April] budget that aim to increase housing supply, advance skilled trades education, and further align immigrant admissions to the needs of the Ontario labour market."

Ontario, home to just under 40% of Canada's 38.2 million people, is Canada's manufacturing heartland. It is also one of the world's largest sub-sovereign borrowers, with publicly held debt standing at C$418.7 billion ($331.3 billion).

In some ways the election campaign was more about what was missing than what was there: namely any bold plans to address housing affordability and economic development, said Ivey School of Business economist Mike Moffatt, who called the campaign a "nothingburger."

Housing affordability felt like a major issue but no party really differentiated itself, he said.

And while everyone said they wanted to boost new home construction, there was little discussion of the workforce needed to do this, added.

"The labour force in that sector is getting quite old."

Ford's party stays in power as the pandemic continues with few public health measures in place and without addressing structural challenges in delivering health care and addressing penurious disability payments even as Long COVID is adding to the burden of disability, Moffatt said.

"We're going to have more people who will have disabilities, who will not be able to work or will not be able to work full-time. This is highly problematic."

(Reporting by Anna Mehler Paperny; Editing by Denny Thomas and Alistair Bell)

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