The Ford government released its 2023 Fiscal Plan with very little of the “pre-conditioning” announcements that have been de rigueur for governments of all stripes the last two decades. Indeed, until yesterday morning’s papers, there’s been nary a whisper, hint or smoke signal as to what Finance Minister Bethlenfalvy had in store for Ontarians.
Well, it’s hard to showcase something new and novel when you are attempting to keep the powder dry and options open in uncertain economic times. Indeed, with record inflation (the highest in decades), very recent financial sector turmoil in the US and in Europe, the economic impacts caused by Russia’s aggression in Ukraine, and other factors, 2023 will be murky for governments to navigate. Indeed, the Finance ministry projects that real GDP growth will be an extremely meagre 0.2 percent for Ontario in 2023. While no recession is anticipated, real growth that low may feel like a recession for some segments of the economy.
An experienced sea captain facing an uncertain storm will batten down the hatches and keep his/her options open; the same philosophy seems to be guiding the Ford government, which is ignoring the howls from Ontario’s NDP, Liberals and public sector unions.
Despite the lack of key signature announcements, there are a few items worthy of note in this year’s Ontario Budget:
- For the first time ever, Ontario’s annual Fiscal Plan will exceed $200 billion – an astonishing figure, even considering the impact that COVID has had on finances and the economy. To put this in perspective, at the end of the Kathleen Wynne era in 2018, Ontario’s budget was approximately $150 billion. Some critics may scream about the underfunding of everything, but it’s hard to see how stingy Ford is accused of being with such a precipitous increase in just five years.
- The 2022-23 budget deficit will come in well below last year’s projections, falling to $2.2 billion, and projected to be $1.1 billion in 2023-24. This is on top of a $4 billion contingency fund that the Ford government has set aside as part of their fiscal planning.
- The Ford government is proposing a new Ontario Made Manufacturing Investment Tax Credit, which would provide a 10 per cent refundable Corporate Income Tax credit to help local manufacturers lower their costs, invest in workers, innovate and become more competitive.
- In addition to the new manufacturing investment tax credit, Minister Bethlenfalvy is launching a comprehensive review of Ontario’s tax system with a priority on ensuring long-term competitiveness. A tax review may also be an early signal of the Ford government’s intention to cut taxes (if the fiscal room allows), which some will see as an effort to shrink the size of government.
- Investments of $184 billion in public infrastructure initiatives over 10 years is proposed, which will include: $27.9 billion for highway expansion and rehabilitation projects, including Highway 413, the Bradford Bypass, and the new Highway 7 between Kitchener and Guelph; $70.5 billion for transit, including continuing to transform the GO Transit rail network into a more reliable and fully integrated transit network, as well as transit investments in Toronto including the Ontario Line, the Scarborough Subway Extension, the Yonge North Subway Extension and the Eglinton Crosstown West Extension; and over $48 billion in hospital infrastructure over the next decade.
- Health care spending is projected to increase approximately 5% annually, in part thanks to the recent agreement with the Federal government and investments by the Province. A series of measures are also included to increase the number of nurses, medical school placements, a further expansion of the role that pharmacists play in the health care system, and expanded mental health supports.
- While health care spending remains the number one program expenditure – by a country mile – the number four expenditure is debt servicing costs. For the upcoming fiscal year, Ontario will spend $14.1 billion on interest costs alone – more than is invested in Ontario’s post education system ($12.1 billion).
While the Budget lacks an overall theme or showcase item, it is designed to provide as much flexibility as possible to confront some of the “stormy seas” that are on the horizon, which includes economic uncertainty, but also challenges from the public sector unions (including teachers, nurses, etc.).
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