Budget deficits have once again reared their head as a major policy issue at the federal level which is somewhat amusing given that not too long ago, the projection was for a
new age of persistent surpluses at the federal level. Not only did the incoming Liberal government immediately begin running large deficits expected to continue until the early 2020s, but the forecast has worsened to an even longer run of deficits. The most recent projection by the
Federal Finance Department says we are looking at deficits at the federal level until about 2055. For my take on this, see
here.
As for budgets, deficits and fiscal sustainability at the provincial level - well, Ontario is still not out of the woods yet. Health spending is a big factor. The province's Financial Accountability Office has just released a
report on trends and outlook in the Ontario health sector. Ontario is restraining health sector expense growth in an effort to balance its budget by 2017-18 but according to the FAO's review of the program changes introduced: "
if the Province is to meet its 2016 Ontario Budget health sector expense
targets, the Province will need to implement additional program changes
that result in health sector expense savings of $0.4 billion in
2016-17, $0.9 billion in 2017-18 and $1.5 billion in 2018-19."
The FAO also notes that the continuation of 2% annual average growth in health spending - which is what the government is currently doing - may be difficult to sustain beyond 2018-19 if service quality and level are not to be compromised.
