Ontario’s 2022 budget projects a deficit at $19.9-billion next year, increased spending for highways

Open this photo in gallery:

Ontario Finance Minister Peter Bethlenfalvy unveiled a pre-election budget on Thursday that pledges billions more in spending for long-term plans to expand hospitals and build highways and puts off eliminating the province’s deficit for another six years.

The Progressive Conservative government, headed by Premier Doug Ford, delayed its budget until just days before heading into its re-election campaign, with voting set for June 2. The government adjourned the legislature on Thursday, meaning the budget will not be passed before the campaign officially starts next week, turning it into an election platform.

The document promises an additional $10-billion for hospital expansion, and would increase spending on highways and roads by $4-billion, both over 10 years.

But it contains few other major new policies or projects, as the government has spent months announcing many of its key provisions, including an end to licence-plate fees for cars, and a pledge to cut the gas tax temporarily.

Analysis: Doug Ford follows federal Liberals with laid-back approach to tackling deficits in Ontario 2022 budget

Ontario budget 2022 highlights: What you need to know about health care, highways and education

For Mr. Bethlenfalvy, a PC Finance Minister who downgraded Liberal-run Ontario when he was at credit-rating agency DBRS Ltd. during the financial crisis in 2009, the budget also contains something that might come as a surprise: a higher deficit and no plan for a balanced budget until 2027-28.

For this fiscal year, 2022-23, the budget projects a deficit of $19.9-billion (including $1-billion in reserve funds, which would reduce the red ink if not spent). This year’s number is up from last year’s $13.5-billion deficit, which included billions the province spent battling the continuing pandemic.

Both figures are much lower than the $33.1-billion in red ink projected in last year’s budget, as the economy, and government revenue, recovered much faster than expected. But the province’s independent Financial Accountability Office said earlier this year that quickly increasing revenues meant the books could be balanced by 2023-24.

Mr. Bethlenfalvy defended the deficits and the spending plan, saying it was necessary to help rebuild the economy after the pandemic and that the debt-to-GDP ratio was headed downward.

Speaking to reporters, Mr. Bethlenfalvy also repeatedly declined to answer yes-or-no questions about whether his government would introduce the same budget if it is re-elected.

“The people of Ontario will vote on this budget,” Mr. Bethlenfalvy said. “It will be up to them if they want to pass this budget.”

Official Opposition NDP Leader Andrea Horwath said she’s concerned about a possible “bait-and-switch,” with the PCs introducing a different, “hidden budget” if they form government again.

But Emily Hogeveen, a spokesperson for Mr. Bethlenfalvy, said later in a statement that this budget would be the one reintroduced.

Delaying the budget, while not unprecedented, required the government to pass legislation earlier this year to exempt itself from its own 2019 law mandating that budgets be presented by March 31, the end of the fiscal year. Under those rules, which then-finance minister Vic Fedeli called an “ironclad guarantee,” Mr. Ford and Mr. Bethlenfalvy would have had to pay 10 per cent of their paycheques for that year in penalties for being late. Mr. Bethlenfalvy told reporters the budget needed to be delayed in light of the economic uncertainty caused by Russia’s invasion of Ukraine and the pandemic.

Over the next 10 years, the budget says, the province will spend $40-billion on new hospitals or hospital expansions, $10-billion more than plans laid out in 2021. The money, the budget says, would add 3,000 beds over those 10 years – on top of the 3,100 surge-capacity beds the province says it has added since the pandemic began..

The budget’s planned increase of $4-billion for highways and roads over the next decade would bring the total spending in this area to $25.1-billion. However, the documents do not spell out the estimated costs of the proposed Highway 413 or the Bradford Bypass north of Toronto, marquee projects the government has made central to its re-election campaign despite concerns from environmentalists.

In his budget speech, Mr. Bethlenfalvy made a point of alluding to Liberal Leader Steven Del Duca, who shelved the 413 when he was transport minister, saying he was still “pandering to those who want to shut down any and all building in the province.” He also accused the opposition of “constantly advocating for closing Ontario” with health restrictions, saying they call for “more mandates, more division and fear.”

Other projects now listed in the province’s highway plans include preliminary bridge work to prepare for a future widening of Highway 401 east of Toronto in Durham Region. Another greenlit project would build a new bridge for the busy Queen Elizabeth Way (QEW) over the Welland Canal, connecting St. Catharines and Niagara-on-the-Lake, and rehabilitate the existing QEW Garden City Skyway.

The budget has no new transit plans, as the government has previously announced big-ticket projects in the Toronto area, including subway extensions in York Region and Scarborough, and a new Ontario Line through central Toronto. However, the government says it is committed to “advancing planning work” that would connect the Sheppard Subway with the future Scarborough subway extension.

There is also no mention of the broad 20-per-cent “middle class” income-tax cut Mr. Ford promised in the 2018 election campaign.

But the budget does include an expansion of the government’s low-income tax credit, which is currently aimed at those who make less than $38,500. The government says it will be expanded to offer help to those making up to $50,000, benefiting an additional 700,000 people and offering an average of $430 in tax relief.

Opposition leaders seized on numbers in the budget showing shortfalls in health and education spending.

Ms. Horwath, the NDP Leader, said spending in these areas is falling behind inflation and is short by $2.7-billion over the next three years. Mr. Del Duca, the Liberal Leader, said the budget shows a “lack of ambition” and offers no new ideas to improve schools or senior care. He also pointed to a drop in education spending of $1.3-billion last year. (The government says the lower outlay was the result of declining enrolment and other factors.)

The budget includes several already announced plans, including an additional $1-billion over three years on home-care for seniors and a commitment to 30,000 new beds in long-term care homes.

Our Morning Update and Evening Update newsletters are written by Globe editors, giving you a concise summary of the day’s most important headlines. Sign up today.