The 2019 Ontario Fall
Economic and Fiscal statement was delivered by finance minister Rod Phillips
today and the basic message is that the deficit is down from the 2019 budget
projection but spending on government priorities is up - notably in health and education. Compared to last spring, this is a “good news”
statement and the outcome of a process of retreat that has marked the Ford
Government over the last six months given the outcry from a number of
directions that restored among other things, funding for autism programs and a
new French language university.
Revenue growth is
greater than anticipated, given Ontario’s booming economy and this has allowed
for a smaller deficit as well as more spending.
The deficit is now projected to be $9 billion which is down from the
original budget estimate of $10.3 billion – but based on interim numbers had
already come down to $9.3 billion.
Based on the interim
numbers since the budget, spending is up from $163.4 billion to $164.8 billion (which
incidentally includes a $1 billion reserve) billion but revenues are up $154.2
billion to $155.761 billion. Revenues
are basically about $1.5 billion dollars more than anticipated while total spending
including the reserve has gone up by about $1.4 billion. So, the deficit is lower than what was both
in the budget and in the interim update but at $9 billion, it is still the largest
deficit since 2014-15 when it stood at $11.268 billion. Moreover, it is expected to decline to $6.7
billion in 2020-21 and $5.4 billion by 2021-22. As a result, the net debt will
rise though the net debt to GDP ratio will stay flat at about 40 percent. Nevertheless, the net debt but is
expected to be $353.7 billion – up from $338.5 billion in 2018-19.
So, based on the
2018-19 numbers, by 2021-22, revenues will have grown by $11.7 billion – an increase
of 7.6 percent - while total expenditures will grow by $9.7 billion – an increase
of 6 percent. So, the plan is
essentially to slow expenditure growth and wait for revenues to catch up which
is a traditional approach used by Ontario governments before this one. Revenues in 2019-20 are definitely up with
CIT revenue $936 million higher and PIT $525 million higher than
anticipated. As well, if the government
holds the line on further spending, the reserve will likely be applied to the
bottom line allowing the 2019-20 deficit to come in at closer to $8
billion.
Nevertheless, despite
all the cries of austerity, it would appear that its business as usual in
Ontario given the “grow your way out of deficits” approach that is being used –
again.
