Ontario Premier Doug Ford’s government has tabled a budget that forecasts a return to surplus sooner than previously predicted, while also warning of economic headwinds related to inflation, interest rates and the war in Ukraine.
The budget is short on major promises but includes more money for supportive housing for homeless people, health care and mental-health treatment, as well as tax credits for manufacturing.
Here is what you need to know about the Progressive Conservative government’s latest fiscal plan.
The Ontario government is projecting to balance the books by 2024-25, three years earlier than forecasted in last year’s budget. The province is projecting a deficit of $1.3-billion in 2023-24 with increasing surpluses in the following two years, reaching $4.4-billion in 2025-26.
For this fiscal year ending March 30, Ontario is expecting a deficit of $2.2-billion, far lower than the projected $19.9-billion hole predicted at this time last year. The budget says this shift is a result of strong growth in 2022 – part of a similar trend across the country as the economy rebounded from the pandemic.
Real GDP was above prepandemic levels by the third quarter of 2022 and increased by an estimated 3.7 per cent last year. Growth is expected to slow significantly with real GDP only projected to increase by 0.2 per cent this year. Employment growth is also expected to remain relatively stagnant, with a 0.5-per-cent increase projected this year.
Ontario’s net debt-to-GDP ratio is projected to be 37.8 per cent in 2022-23, the lowest since 2011-12, attributed to the lower than forecasted deficit and higher economic growth. The budget forecasts the ratio will remain the same in the coming fiscal year and dip to 36.9 per cent by 2025-26.
The net debt is forecast to be $407-billion in the coming year, increasing to $430-billion by 2025-26.
The province is expecting to pay $13.4-billion in interest costs in 2022-23, lower than last year’s budget forecast as a result of lower than anticipated borrowing.
Ontario’s budget also includes an updated strategy to reduce the province’s debt burden with new targets to improve its credit rating and lower the cost of borrowing. The province is expected to come in under the debt targets set in this year’s budget. Interest on debt-to-revenue is projected to be 6.9 per cent in 2023-24.
The budget includes new tax credits and expanded relief eligibility for small businesses.
The government plans to increase the income threshold for small businesses to receive a tax deduction from $15-million to $50-million in taxable capital. This would provide about 5,500 small businesses with relief of $265-million over four years, the budget says. An eligible business could receive more than $36,000 in tax relief each year as a result.
More seniors could also be eligible for financial support through a proposed expanded eligibility of Guaranteed Annual Income System payments starting in July, 2024. A new manufacturing tax credit, unveiled in a prebudget announcement on Wednesday, would provide a 10-per-cent tax credit up to $2-million for local manufacturers.
The budget calls on the federal government to provide HST relief, through rebates, exemptions or deferrals, for new large-scale housing and rental development projects.
Ontario is planning to spend $81-billion on health care programs in 2023-24, up by $6.1-billion from the year prior.
The province is earmarking $425-million over the next three years to expand mental-health services, providing mental-health and addictions service providers with a 5-per-cent increase in funding to develop community-based programs, addictions services across the province, and new youth wellness hubs.
The government has also allocated $72-million in the coming fiscal year for its plan to address a backlog of surgeries across the province by ramping up the use of private surgical and diagnostic centres for publicly funded surgeries, such as cataract procedures.
Ontario also plans to beef up its health care work force with an additional $33-million over the next three years to accelerate the rollout of training seats for doctors, resulting in an additional 100 undergraduate and 154 postgraduate positions. The government is also accelerating its planned spending in home and community care, increasing the amount in the coming fiscal year to $569-million, with more than half to go toward increasing wages for personal support workers and other staff.
The budget touted the government’s work on housing, including passing of Bill 23, which included a range of measures to speed up the construction of new housing and meet the province’s goal of building 1½ million homes over the next decade.
This bill, which became law in November, provoked loud criticism by reducing development charge revenues for local governments.
The province later promised to make municipalities whole for any cut in development charges, which cities use to build parks, community centres and other infrastructure. Mayors say the reductions will be significant, with the Association of Municipalities of Ontario pegging the shortfall at $5.1-billion over the next nine years.
The provincial government wants to have a third-party audit to determine the precise losses an the budget does not include anything about the potential cost.
The budget included a promise to continue pushing the federal government to reduce taxes on new and rental housing. And it pledged what it said was $202-million in new annual funding for homelessness prevention and Indigenous supportive housing.
The government reiterated previously announced spending on transit while also touting its plans to build two new highways and expand several others.
Transit capital spending will total around $70.5-billion over the next decade – about the same as the projection for school and hospital construction combined. The bulk of the money will go to new or expanded subway lines in Toronto, as well as increased capacity of the regional GO train commuter network.
Major roadworks planned include Highway 413 and the Bradford Bypass in suburban Toronto, controversial projects that critics still hope to stop. Expansions include twinning a bridge of the QEW over the Welland Canal, in St. Catharines, and widening of Highway 401 in Pickering. The budget does not include specific costs for any of these.
The government has also allocated $139.5-million for new rolling stock to allow resumed service of the Ontario Northlander, a train connecting Toronto and Timmins.
The budget ignored Toronto’s call for a bailout as the city struggles with another year of COVID-related revenue shortfalls.
Even though the pandemic has begun to recede, its financial effects remain substantial. Toronto is projected to be short $366-million this year from reduced ridership of the Toronto Transit Commission alone.
As Ontario’s budget approached, along with the federal budget expected next week, Toronto Deputy Mayor Jennifer McKelvie recently urged both of these governments to provide relief for what she called the “COVID hangover.” (Ms. McKelvie is acting as head of council following the resignation of John Tory.)
She sought $423-million from the Ontario government, but there was no mention of that money or any help to right the city’s finances in Thursday’s budget.
The budget included mention of Ontario Place, where the province is pushing a controversial makeover of the site on Toronto’s waterfront. It cited progress preparing the site for private development as an entertainment destination and pledged to “bring Ontario Place back to life.”
Editor’s note: An earlier version of this story stated incorrectly that Bill 23 included removing land from the Greenbelt. This version has been corrected.