Ontario’s 2026 Budget: Facing Economic Challenges

  

Ontario's Premier Ford seems to have grown more theatrical over time in his public pronouncements whether of the economic nature or otherwise.  There is also a preoccupation with the announcement of large infrastructure initiatives with many targeted to the GTA area the latest of which is the move to extend the runways at Billy Bishop Airport to accommodate jets.  This is all understandable given the buffeting that the Ontario economy has taken in the wake of the Trump Tariffs and the effect on Ontario exports and the auto sector in particular and the rising unhappiness and dissatisfaction of the Ontario public.  And yet, despite diversionary theatrics and announcements, the challenges facing Ontario are not going away.

There are numerous challenges facing Ontario as Thursday’s budget approaches and they can be divided into short and long term.  On the immediate front, Ontario has seen a decline in employment and a rise in unemployment rates because of the continuing fall out from the trade and tariff dispute with the United States.  There is the continuing challenge of health care as families have difficulty accessing timely physician and hospital services.   And of course there is the cost of housing which has not been helped by Ontario’s inability to boost housing starts which as one report has noted is an Ontario rather than Canadian problem per se.  Then there are the public finances which in the short term have seen continued deficits and despite pledges that the budget will be balanced by 2027, is looking increasingly unlikely.  Over the longer term, Ontario faces a productivity problem best illustrated by real per capita GDP which is essentially unchanged from 2018 and a net debt problem which the province’s Financial Accountability Office estimates will reach $548 billion by 2029-30.

 

 

The best way to summarize the economic challenges facing Ontario is through a few charts.  Figure 1 starts off with a long-term view of Ontario’s real per capita GDP and the growth rates over time.  The takeaway here is that over the long run, the growth rate of real per capita GDP has trended downwards.  More serious from the Ontario Premier’s point of view, real per capita GDP in Ontario has essentially been stagnant since 2019.  In that year, real per capita GDP ($2017) was $59,681 and in 2025 it was $60,052.  If one factors out the pandemic drop and rebound of 2020 and 2021 – real per capita GDP in Ontario since 2018 has grown at 0.4 percent annually. It’s 0.3 percent annually if you factor in the two pandemic years.  Ontario is essentially amidst a lost decade in terms of per person income growth – it just has not been labelled that yet given that Ontario is also amidst a lost decade when it comes to an effective political opposition.

 

 

The slowing of the Ontario economy has been especially noticeable in rising rates of unemployment and those rates while up across the province, have been quite noticeable in the GTA where half of Ontario’s population and employment resides. Figure 2 plots the monthly unemployment rate sin Ontario for the province and by economic region since 2016.  Again, taking away the pandemic spike, they were on the decline until early 2023 and have since started to rise.  In the GTA, the unemployment rate was just over 5 percent in early 2023 and rose to reach 9.5 percent by September of 2025.  It has since subsided a bit but is still at 7.6 percent.  That is the third highest rate of Ontario’s 11 economic regions as illustrated in Figure 3.  Having many unhappy voters concentrated in such a large vote rich area is not good news. 

 

 

The deteriorating employment situation is further illustrated in Figure 4 which plots the change in employment for Ontario and its 11 economic regions both over the course of the last 12 months – February 2025 to February 2026 and more recently since July 2025. While Ontario since February 2025 is only down 7400 jobs, if you look at where employment has gone from the summer peak, the drop has been about 150,000 jobs.  The largest drops in absolute numbers have been Ottawa (-46,400), Toronto (-24,600), Kitchener-Waterloo-Barrie (-40,600) and Hamilton-Niagara (-37,300).  

 

 

So, come Thursday, many Ontarians will be looking at what the government might do to alleviate the economic hardship that is afflicting Ontario.  Will there be long run measures to boost productivity and the supply side of the economy that ultimately will raise incomes, and reduce unemployment and inflation, or will Ontario continue with short term measures that grab political attention or temporarily alleviate cost of living through demand side boosts that boost inflation further. Stay tuned.

When Will Highway 1 Through Northwestern Ontario Be Fixed?

  

It has been a grim start to 2026 on the roads and highways of Northwestern Ontario with 11 deaths recorded so far,aggravated in part by the harsh winter conditions we have experienced this year.  This has once again prompted regional leaders to call for improvements to the 11 and 17 highway corridors with either more four-laning or a two plus one system (a three-lane highway configuration where the middle lane changes direction every two to five kilometres for passing).  The bottleneck at the Nipigon bridge is especially problematic given that both highways converge at that point.  Of course, the stretch between Nipigon and Shabaqua has gradually been widened to four lanes in spots, but the process has been underway for over twenty years, and substantial portions remain to be completed. 

On top of that, the amount of traffic has increased substantially particularly with respect to transport trucks.  The increase in traffic comes with demographic changes as older drivers have been retiring and it seems there is a plethora of new drivers with a lot less experience driving two lane highways.  Traffic is only going to increase given that east-west traffic appears to have increased in the wake of American tariffs and to that can be added a future where nuclear waste shipments will be trucked to Ignace which is going to be the designated nuclear waste repository for all of Canada.

Of course, the call for highway improvements in the region has been as ubiquitous and lonely as the haunting calls of the loon.  Annual meetings of NOMA and other regional gatherings invariably issue a call for highway improvements with the case for what is perceived by many in the region to be a piece of critical national infrastructure falling on deaf ears. And there have been opinion pieces and reports often in national venues making the case for an improved national highway system through northern Ontario but again they seem to have been only of limited impact.  Even the Rosehart Report in 2008 noted that “For at least three decades, the residents of Northwestern Ontario have requested four-laning of the main highway from the Manitoba border to Southern Ontario (Highway 17)” which means that really this has been going on for half a century and yet here we are.

Northwestern Ontario is a vital zone of transit between the east and west of Canada and the case can certainly be made that as part of a resilient national economy and defense strategy, the highways through the region need to be improved.  There is even a case for an extension of Highway 11 over the top of Lake Nipigon to provide as second east-west route independent of the bottleneck at Nipigon.  However, the case for public safety is also an important one and for that one needs top look at the historical record of road and traffic fatalities in Ontario over time as well as a comparison of Northwestern Ontario with the rest of the province.

Figure 1 plots the number of persons injured and persons killed per 100,000 population for all of Ontario from 1931 to 2024 using data obtained from Ontario Road Safety Annual Reports – which incidentally are only preliminary after 2022 and do not offer as detailed a look as previous reports. Nevertheless, the chart shows that there used to be a time when Ontario was smaller in population and yet highway and road carnage was rather high.   

 

Road deaths per 100,000 population were 17 per 100,000 in 1931 and trended upwards to peak in the early 1970s at 24 deaths per 100,000 population.  They then trended downwards because of improvements in automobile safety as well as the passage of seat belt laws in 1976 and 2006.  Despite the increase in Ontario population and higher urban and road use densities, by 2012, motor vehicle deaths per 100,00 population in Ontario bottomed out at about 4 per 100,000 and have remained stable since.

 

Compare now Northwestern Ontario statistics for Kenora, Rainy River and Thunder Bay districts over the last decade with Ontario.  Figure 2 plots motor vehicle collision deaths per 100,000 population for Northwestern Ontario versus Ontario from 2015 to 2024.  The average for the 2015 to 2024 period is 11.3 deaths per 100,000 for Northwestern Ontario versus 4 deaths per 100,000 for Ontario as a whole.  Moreover, while the Ontario numbers have remained largely stable over the period, the ones in Northwestern Ontario exhibit a distinct upward trend when a linear fit is applied.  In other words, things are getting worse. 

 

The deaths in Northwestern Ontario over the 2015 to 2024 period have ranged from a low of 7.8 deaths per 100,000 population in 2016 to a high of 13.8 in 2021.  As for 2026, if deaths continue at the current rate, there could well be 40 deaths this year or about 16 per 100,000 population.  Going back in time for Ontario, the last time there were approximately 16 traffic collision deaths per 100,000 population in Ontario was 1981 – that was nearly half a century ago. Or if you like, Northwestern Ontario road and highway death rates in 2026 will be akin to Ontario in the 1930s. 

So again, we again ask the question.  When will Highway No. 1 through Northwestern Ontario be fixed?  Will we have an answer before 2076?

Ontario Government Health Spending Trends: It’s Complicated

 

The 2025 CIHI National Health Expenditure trends are out with the key national findings being that total health care spending in Canada is expected to reach $399 billion in 2025, or $9,626 per Canadian with that expenditure representing 12.7% of Canada’s gross domestic product (GDP) in 2025. Total health care spending in Canada is expected to grow by 4.2% in 2025 following a 6.1% increase in 2024 and 7.4% in 2023.  I will be dealing with the national numbers elsewhere but my interest in this post is Ontario provincial government health spending which for 2025 is estimated at $93 billion up 3.3 percent from the year previous and not as large an increase as 2024 at 6.3 percent.  While the provincial government makes much of its spending increases being at historic levels, a 3.3 percent increase does not keep up with inflation and population.

Figure 1 plots real per capita Ontario government health spending in 2025 dollars (deflated with the CIHI’s Total Health Care Implicit Price Index) along with the spending to GDP ratio for the 1975 to 2025 period and while the overall trend is upwards, the period since the pandemic is particularly noteworthy.  After the pandemic surge in real per capita provincial government health spending of 8.5 percent in 2020 and 4.9 percent in 2021, each subsequent year has seen negative growth with 2025 declining just over one-fifth of one percent. However, at $5,750 per capita ($2025), spending in 2025 remains nearly 10 percent above the 2019 amount of $5,233 ($2025) implying average spending growth since 2019 of approximately 1.7 percent annually.

 

 

What is more interesting in Figure 1 is that while real per capita provincial government health spending has been trending down since 2021, its share of provincial GDP has been going up.  How can that be?  As anemic as provincial health spending growth has been relative to inflation and population, it turns out Ontario’s economic growth has been even more anemic.  This is not the greatest news.

Figure 2 illustrates that despite slightly negative real per capita growth in provincial government health spending; there is considerable variation across categories that may signal what the government’s priorities are.  Real per capita hospital spending declined 3.5 percent in 2024 but is expected to rise 0.5 percent in 2025.  After a 5.3 percent increase in 2024, real per capita other institutions (i.e., long term care) will decline one fifth of one percent with a similar pattern for physicians at 5.1 percent in 2024 but -1.4 percent for 2025.  Other professional (e.g. optometrists) drugs, public health and administration are being hit with consecutive declines in real per capita spending.  Other health spending including home and community care is seeing an increase in 2025 while real per capita capital spending will rise nearly 20 percent in 2025.  While renewing capital infrastructure in provincial government health spending is welcome, all that shiny new equipment and buildings will need hospital and physician services as well as drug spending down the road.

 

 

And if you are interested in something different, Figures 3 and 4 present provincial government health spending by age categories to look at what an aging population has been doing to provincial government health spending.   Figure 3 plots per capita provincial (nominal dollars) government spending by age group for four years spanning the 2000 to 2023 period and they show the typical expected u-shaped cost curve with spending highest at the very early ages of birth to about 4 years, then rising gradually and growing more dramatically after the late 50s.  In 2023, the per capita spending for a person under 1 year of age averaged $17,591 dollars, for a 25–29-year-old it was $2,594, for a 55–59-year-old it was $5,037 and for an 85–89-year-old it was $29,415.  Indeed, health care costs can rise dramatically over the later years of the life cycle.

 

 

However, the astute gentle reader will note that the profiles by age have been shifting upward over time.  That is, spending has been going up for all the age categories and figure 4 plots the percent changes in per capita provincial government spending from 2000 to 2023 by age category. While spending per capita is highest for the elderly, growth over time has been the greatest in much younger demographics.  The greatest growth was in the age 10-14 category at 207 percent, followed by the below 1-year category at 204 percent, then 194 percent for those aged 5-9, 172 percent for those aged 15-19 and 169 percent for those aged 1-4 years.  After that come 35–39-year-olds at 153 percent, 40–44-year-olds at 151 percent, and 45–49-year-olds at 145 percent.

 

 

The smallest increases over the 2000 to 2023 period?  At the bottom are 80–84-year-olds at 90 percent, next highest are 75–79-year-olds at 94 percent and then 70–74-year-olds at 96 percent.  Health spending does rise with age, and much more is spent per capita on the elderly than the young.  However, in percentage terms, the greatest increases have been in the population aged 19 years and younger followed by the population aged 30 to 64 and 90 plus.  Lowest increases are in the 20-29 age groups and the 70-89 age groups.  This is an interesting and somewhat counter intuitive results given the conventional wisdom is that health care costs are being driven largely by an aging population.  It would appear the drivers of provincial government health care spending are more complicated than one might imagine.

Note: Livio Di Matteo is a member of the CIHI NHEX Advisory Panel. 

The Finances of the University: Lakehead’s Exceptional Performance

 

With all the doom and gloom about the finances of Canadian universities these days, it is refreshing to know that some universities have been doing well in coping with all the fiscal challenges thrown at them over the last decade.  Nowhere is this more the case than in Ontario where domestic tuition fees were cut 10 percent in 2018 by the province, and have remained frozen since, provincial government grants have generally been a declining source of revenue and the flow of international students curtailed by the federal government. While Ontario produced Laurentian, it has also produced Lakehead where the last decade has seen a better financial performance than one might have expected which is good news for Thunder Bay, northwestern Ontario and of course the students, staff and faculty at Lakehead.

The evidence is quite convincing.  Figure 1 (and subsequent figures) takes data from the audited financial statements of Lakehead University from 2014 to 2025 and plots total revenues and expenditures.  Between 2014 and 2025, Lakehead’s total revenues grew from $177.3 million to $246.0 million - 38.7 percent – while total expenditures grew from $167.0 million to $230.5 million – a 38 percent increase.  While the pandemic period from 2020 to 2022 saw a dip in revenue growth, since 2022, revenues have managed to grow faster than spending. Indeed, over the period 2015 to 2025, the average annual growth rate of revenues was 3.3 percent compared to 3.0 percent for expenditures.  

 

 

The result has been a decade where the budget has usually been balanced, sometimes with substantial surpluses, and the long-term debt been reduced.  Figure 2 plots Lakehead University’s deficits (-)/surpluses (+) as well as the total long-term debt again from 2014 to 2025.  Out of these 12 budget years, Lakehead ran a surplus 75 percent of the time with an accumulated surplus of $43.9 million while the long-term debt has decreased nearly 16 percent going from $111.5 million in 2014 to $94.0 million in 2025.  The worse deficit year was 2022 with a deficit of $16.7 million in the wake of the pandemic but the three years since has seen growing surpluses with 2025 at $13.5 million.

 

 

Drilling down into some of the data, Figure 3 presents the data for Lakehead’s major revenue sources – provincial government grants and student fees.  In 2025, these sources made up 82 percent of Lakehead’s revenue with the remainder a combination including investment income, research income, ancillary fees, and sales of goods and services.  The narrative regarding provincial government grants should be nuanced by the fact that there are the general operating grants and then more specific restricted grants tied to conditions.  In 2014, the value of the operating grant was $65.3 million, and it then proceeded to decline through to 2019 when it reached $62.9 million.  Note that this decline preceded the arrival of the Ford government in 2018 showing that in the end universities in Ontario do not have any tried-and-true political party friends at the provincial level. Grants then rebounded in 2020 declining to a low of $61.6 million in 2022. Since 2022, the operating grant has been somewhat erratic rising to $66.7 million in 2023, falling to $61.0 million in 2024 and then climbing again to $69.5 million in 2025.  Stable funding it is not.  As for restricted grants, they climbed in fits and starts going from $15 million in 2014 to almost $17 million by 2021 and then rising more steeply to 30.5 million in 2025. 

 

 

While total provincial grants to Lakehead grew 25 percent from 2014 to 2025, the real revenue story is in student fees which rose from $57.5 million to $102.4 million – an increase of 78 percent.  This is even though overall enrolment has grown but not in leaps and bounds.  The revenue increase is largely the result of a compositional shift as more higher tuition paying international students arrived at the university.  Given that many of these students are primarily graduate level and in disciplines that are in demand, it appears the immigration restrictions have not hit Lakehead’s enrolment as hard as some other universities.  This suggests a careful mix of programs tailored to demand.

So, to summarize, Figure 4 presents the average annual growth rates of these major indicators for the 2015 to 2025 period.  Total revenue at Lakehead has grown at an average annual rate of 3.3 percent while expenditures have grown 3 percent.  This in and of itself presents a picture of fiscal sustainability rooted on both the expenditure and revenue side.  While general operating grants have only grown at an average annual rate of 0.7 percent, restricted grants (targeted to some purpose) have grown 8.7 percent annually and student fee revenue has grown 5.5 percent.  And the icing on the cake is that long-term debt has been declining at -1.5 percent annually. 

 

This is extremely good news and evidence that even in today’s challenging university environment, it is possible to succeed both financially and academically as a university offering programs in a fiscally sustainable manner.  Lakehead has managed this operating as it does in a dispersed fashion with campuses in Thunder Bay, Orillia and Barrie making it a province wide university.  This success may indeed serve as a model for future of Ontario’s universities. This success is also a testament to the strength of its board and administrative leadership as well as its students, staff and faculty.  It is nice to have some good news for a change.

No quick fix for Ontario’s economic decline

 This originally appeared in the Fraser Institute Blog, August 13th.

 Ontario continues a decades-long economic malaise. From time-to-time economic analysts arise to point out the decline only for the news to be treated as so much water off a duck’s back. Indeed, the complete picture as measured by real per-capita GDP has evolved to the point where the response should be alarm rather than concern.

Moreover, the solutions now being advanced by the Ford government (and others) to move Ontario’s economy forward are quick big fix projects that do not address economic fundamentals. Despite an economy considered Canada’s powerhouse in terms of size, export intensity, and manufacturing depth, the trends are disconcerting. This is not a short-term aberration attributable to the tariff disputes with the United States but a sustained inability to effectively grow the economy.

The chart below plots Ontario’s real per-capita GDP (in 2020 dollars) along with the average real per-capita GDP of the rest of Canada from 1926 to the present using data from Finances of the Nation. For most of the last 100 years, Ontario has been the wealthiest province in the Canadian federation as measured by real per-capita income. Moreover, the gap has usually been substantial.

 

 

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For example, in the 1920s, the per-capita income of the rest of Canada was about two-thirds that of Ontario. This proportion persisted well into the early 1970s at which point it began to quietly erode. By the late 1970s, the average real per-capita GDP of the rest of Canada had reached more than 80 per cent of Ontario’s. The economic boom of the 1980s masked Ontario’s decline but the period since the 1990s has seen its relative decline continue and the per-capita GDP of the rest of Canada now is just over 100 per cent that of Ontario.

In 1960, Ontario has the highest real per-capita GDP of all 10 provinces. By 1990, it was in second place just behind Alberta but ahead of British Columbia. In 2005, Saskatchewan surpassed Ontario moving it to third place while by 2022 Ontario’s rank had moved to fifth place. Essentially over the course of just over half a century, Ontario went from the top province in terms of per-capita GDP to mid-ranked. Ontario is exhibiting more characteristics associated with the Atlantic provinces—Ontario received equalization for the first time in 2009—than the more dynamic western parts of the country. A province that once had hopes as high as the tallest tree, now is lucky to aspire to economic heights akin to a lilac bush.

What has happened to Ontario is more than a re-equilibration of the federation as resource rich provinces developed or the effects of adjustment to a more competitive free trade world in the wake of the FTA and NAFTA. Simply put, Ontario has experienced a productivity decline rooted in a failure to boost business investment. While Ontario is a mineral and resource rich province, it has been unable to bring resource projects online—the Ring of Fire a case in point. This has been accompanied by a governmental and business culture focused more on process and regulation than on trying to get things done and a cultural shift to gaining wealth through supply restraint and asset appreciation rather than hard work.

Nowhere is this more evident than in housing investment where population growth has outstripped additions to housing stock. The regulatory framework towards getting projects approved, permitted and built is generally a labyrinth. Large amounts of both suburban and northern land were environmentally sequestered from development without steps to ensure density development creating artificial scarcity particularly in the Greater Toronto Sarea (GTA). The effects on new supply were worsened by the fact that new housing began to be treated as an investment by the public and a revenue source by governments given the plethora of tiny investor driven condo buildings and the development charges accounting for a large proportion of the price of new housing.

While there are signs that the Ontario government is finally trying to overcome these past missteps, it’s an uphill struggle given the continual grasping at quick fixes designed to promote rapid economic growth. The passage of Bill 5 gives the Ontario government the powers to establish special economic zones to speed up mining and other development projects. One suspects the goal is to speed up development in the critical mineral rich Ring of Fire area which has been on the cusp of development for decades but has yet to really go anywhere. Yet it may be too little too late as critical minerals are considered crucial for electric vehicle production but the demand appears to be slowing.

The Ontario government does not have a coherent economic strategy designed to boost long term productivity and investment but rather is hitching its wagon to quick fix large scale investment projects and the attraction of federal investment dollars in the face of President Trump’s economic and commercial assaults on the Canadian economy. Among the nation building projects that the Ford government would like federal support for are a tunnelled expressway under Highway 401, all season road access to the critical minerals of the Ring of Fire, new nuclear generation projects, and a new deep sea port on James Bay.

Ontario is also supporting the idea of an east-west pipeline made with domestically produced steel that would connect to a not-yet-built port of James Bay as well as a new rail line from the mineral rich Ring of Fire to mineral processing facilities in Western Canada. Strangely enough, Ontario has not put forward the enhancement of the vital east-west Canadian highway link passing through its north as a major nation-building project which is a curious oversight, instead leaving it up to municipalities to advocate.

In many respects, this aspirational mega project vision of economic development for Ontario is a serious case of déjà vu as many of these projects resemble a wish list from the 1960s and 1970s. Even developing deep-water ports on James Bay is a concept with a history stretching back to the 19th century. Some of these projects—such as new pipelines—are tied to resource development and are welcome given Canada’s comparative advantage in resources but a return to simple hewers of wood and drawers of water is also not where we should be going.

How does Ontario invest in 21st-century resource extraction in a manner that boosts high technology and create backward linkages into our tech and AI industries? How can Ontario break through the regulatory morass slowing the construction of homes, new resource projects and economic activity in general—regulations that in total have been estimated at 386,000 requirements? What will Ontario do to create tax incentives for business investment and individual labour supply, given that highest marginal personal income tax rates are close to 54 per cent?

Getting on the quick fix mega-project bandwagon is easy. Putting in place the environment that might help some of these projects succeed is not.

 

Long-Term Municipal Debt in the Northern Ontario Big Five

 

Well, I have been reacquainting myself with municipal debt in Ontario over the last little while culminating in this short piece for the Fraser Institute and a discussion with Jonathan Pinto’s Up North focusing on northern Ontario and Sudbury in particular. There is also this interesting item regarding Farquier-Strickland which suggests that some smaller and more rural Ontario municipal governments are under quite a bit of stress and that large debt loads can have an impact on the long term financial sustainability of municipal finances.  In any event, municipalities going bankrupt in Ontario is something out of the 1930s and most of the current regulations governing municipal finances were a response to the financial turmoil of the Great Depression. 

It turns out that during the Great Depression: “By 1935, 20 percent of Ontario municipal debt was in default (Hillhouse 1936). During the early 1930s, more than 40 Ontario municipalities and school boards defaulted on their obligations.” [Cote and Fenn, 2014]. It is this historical context that haunts some of us as municipalities take on debt even though current debt burdens are well within the debt service requirements of provincial regulation in Ontario and for the most part (Farquier-Strickland excepted I suppose) Ontario municipalities have built up substantial reserves. 

Nevertheless, it is worth monitoring municipal debt levels and the accompanying figure presents the total long-term debt of the big five northern Ontario municipalities from 2000 to 2023 with data obtained from the multi-year reports of the Ontario government’s municipal Financial Information Review.  In 2000, the total debt burden of these five municipalities was relatively closely clustered with Greater Sudbury at $13.3 million, Thunder Bay at $45 million. The Sault and North Bay at $26 million respectively and Timmins close to zero. Things have progressed since then, though for the longest time it was Thunder Bay that was the long-term municipal debt outlier zooming ahead of the others such that by 2008 it peaked at $230 million before coming down somewhat.  Nevertheless, until 2019 it still had the largest total debt of any of the northern Ontario big five.

 

 

Starting in 2019, Greater Sudbury began to ramp up its municipal debt– after a more modest ramping up from 2014 to 2019 – and from 2019 to 2020 went from $70 million to $262 million.  By 2023 it had reached $325 million and is apparently poised by 2027 to reach $600 million. As of 2023, the northern Ontario big five collectively had nearly $700 million in Ontario debt.  With Sudbury’s ramping up to $600 million along with other anticipated expenditures in these other major northern Ontario cities, the total should surpass $1 billion by 2027.  Debt service costs on this debt in the case of Sudbury will likely double from the current 3-4 percent of total own source revenue but remain well within the provincial guideline of no more than 25 percent. Still, all other things given, more money for debt service means less money for current programs.  It is a trade-off that needs to be considered.