Ontario Premier Doug Ford’s plan to balance the government’s books depends on an additional $6-billion in unspecified reductions, the province’s financial watchdog says, while also warning that economic uncertainty could hinder efforts to tackle the deficit.
The spring economic and budget outlook from Peter Weltman, Ontario’s independent Financial Accountability Officer, comes as Mr. Ford clashes with municipal leaders, including Toronto Mayor John Tory, as well as school boards and teacher and healthcare unions over the cuts the Ford government has already announced in the wake of its first budget, unveiled last month.
Now, Mr. Weltman says Ontario’s plans to balance the books in by 2023-24, a year after the next election, rely on a second round of $6-billion in unidentified spending cuts that start in 2021-22. While Mr. Ford and his Finance Minister Vic Fedeli have said they have found 8 cents on every dollar in spending to cut over the next five years, Mr. Weltman says his analysts could only find half of those reductions actually spelled out in the budget.
“I think the Legislature needs to ask the questions of the government as to articulate the spending plans, understand better what the efficiency measures are,” Mr. Weltman told reporters.
Robert Gibson, a spokesman for Mr. Fedeli, said the budget was “fully costed,” but would not reveal further details: “Budget 2019 lays out the first steps of our plan and we will continue to roll out our responsible path to balance over the months and years ahead.”
Mr. Weltman’s report also says the government’s budget projections include billions of dollars of as-yet unannounced tax breaks and spending measures. These tax cuts and spending moves would, if implemented, start in 2021 and cost the government $5.5-billion by 2023-24. They appear to include the PC election campaign promise to cut “middle-income” taxes by 20 per cent, starting in the government’s third year in office.
But Mr. Weltman warns this move could further slow the reduction of the province’s deficit and add $13-billion to Ontario’s large and still-growing debt load, which is projected to rise steadily and hit $398-billion by 2023-24 – up from $343-billion today.
The report also lays out the overall scope of Mr. Ford’s austerity plans: capping annual program spending growth at about 1 per cent, well below inflation for the next five years. It’s a level not seen since the mid-1990s, under PC premier Mike Harris, when spending growth averaged just 0.3 per cent. The restraint will mean a decline in program spending of $1,100 for every Ontarian over the next five years, a 10-per-cent drop – even as Ontario already ranks second-last among Canadian provinces by that measure.
Mr. Weltman’s numbers also assume a slower rate of economic growth than the province’s calculations do, noting current uncertainty around trade with China and the United States, as well as worries over high rates of household indebtedness. And as the Bank of Canada did recently, Mr. Weltman cites Mr. Ford’s own cuts to government as a significant drag on Ontario’s overall economy, blaming them for shaving 0.2 percentage points a year off real GDP growth, which his office expects to average just 1.6 per cent over the next five years.
Green Party Leader Mike Schreiner said the report shows Mr. Ford’s cuts are doing more to slow economic growth than the federal government’s carbon tax, despite warnings from the Premier that the new tax – which he is fighting in court and with taxpayer-funded TV ads – would cause a recession.
“It’s clear ... that any economic slowdown would be due to the austerity measures of the Ford government,” Mr. Schreiner said.
Meanwhile, the battle over Mr. Ford’s cuts showed no signs of flagging. On Wednesday, Mr. Tory launched an online petition against the $180-million in cuts hitting his city, warning that Toronto PC MPPs could “pay a heavy price” in the next election. And on Thursday, advocates will release a letter signed by several former Ontario ministers of health urging the government to reverse its cuts to public health.