Well, the Ontario 2021 budget came out yesterday and it is
rightly preoccupied with the COVID-19 pandemic. COVID-19 funding and support will continue to
flow for the next couple of years and along with the $20.1 billion of support
in 2020-21, there will be an additional $6.7 billion and $2.8 billion in the
subsequent two years before the government anticipates a return to some type of normalcy.
For 2020-21, the deficit is estimated at $38.5 billion and
for the 2021-22 fiscal year it is expected to be $33.1 billion and then $27.7
billion the year after. However, the
government has actually proposed a fiscal plan for getting to a balanced budget
–but it is very long-term. Deficits are
projected to continue falling until 2029-30 when there will finally be a $900
million-dollar surplus – assuming the projections for economic growth and
spending take shape and indeed, that the world should last so long.
Figure 1 presents the numbers for total revenues, total
expenditures and the deficit out to 2029-30 but also puts them into historical
perspective. The numbers are from the
Fiscal Reference Tables for the 1990 to 2019 period with GDP numbers from
Statistics Canada and the Ontario 2021 Budget for the years after up until
2029. If these projections come to pass, Ontario will have run since 2008-09 a
total of 21 budget deficits before reaching “balance” in 2029-30 resulting in
accumulated deficits of $284.9 billion.
By 2029, Ontario will be taking in $210.1 billion in revenues – up 35
percent from 2019-20 – and then spending $209.1 billion- up 27% from the same
reference point. The net debt that will rise from $397.2 billion in 2020-21 to
reach an astounding $585.3 billion by 2029-30 and a net debt to GDP ratio that
will remain just short of 50 percent for an entire decade. Moreover, as the stock of debt rises, so does
debt service and its rises from $12.5 billion in 2021-21 to $20.6 billion in
2029-30 – an increase of 65 percent.
It indeed will be the roaring twenties when it comes to the
growth of net debt and debt service costs in Ontario. Ontario’s fastest growing expenditure
category from 2021 to 2920 will be debt service costs. The average annual growth rate for nominal
health spending is expected to be 2.6 percent.
Education will grow at an annual average of 1.1 percent, post-secondary
education at 1.2 percent, children and social justice comes in at 0.6 percent
annually (so much for children as the future) and interest on the debt at 5.1
percent.
The results for health care spending are particularly at
odds with the Ford government’s commitment to increasing hospital capacity and
long-term care. While base health
spending – that is not including the short-term COVID-19 bump - is projected to grow at 2.6 percent a year, it
means that given population growth of about 1 percent annually and inflation of
2 percent, real per capita spending on health will at best stay flat and even
decline somewhat.
This will come after nearly a decade of relatively flat real
per capita provincial government health spending in Ontario and it seems to conflict
with government claims it is going to boost health and long-term care. We do
seem to be heading for a rather dire fiscal future in which the budget is not
going to be balanced, the public finances are not sustainable and spending on
important things like health will actually decline in real per capita
terms. It is indeed a rather bleak
looking future for health care in Ontario despite all the government spin.
