The Ontario government’s finances are a paradox. The PC government regularly boasts about “historic” levels of spending, but faces constant complaints about underfunding, especially from the health-care, education and post-secondary sectors.
What’s the real picture?
In fact, budget figures show that revenue and spending have increased dramatically since Premier Doug Ford was first elected. In 2019–20, his first full-year budget, total government revenue was $156.1 billion. This year, it’s projected to be $219.9 billion, a 41 per cent increase. Spending has gone up by about the same percentage, from $164.8 billion in 2019–20 to a projected $232.5 billion this year.
With such a large spending increase, it’s hard to believe that anything could be underfunded, but discouragingly, that is the case.
Ontario’s per capita spending on
in the country. Per-student funding for Ontario
in Canada. The province does a bit better on
public education, with the sixth highest
per-student funding nationally.
Those are disappointing numbers. One would expect more from the country’s biggest province.
It’s not like the Ford government is restraining spending to balance the books. Far from it. That first Ford budget had a $9-billion deficit and the current one projects a deficit of $14.6 billion.
A
new report card on this year’s budget
gives Finance Minister Peter Bethlenfalvy a grade of D- for his performance on the critical issues of debt, debt interest payments, spending increases and tax relief.
The Canadian Taxpayers Federation report notes that Bethlenfalvy’s latest budget increases debt by $22 billion, and says that by the end of the budget year, debt will have reached $461 billion. That’s about $28,472 per person, the second highest in the country. Net interest payments will cost Ontarians just over $1,000 per person this year, the fourth highest in the country. Spending is up 7.9 per cent, third highest among provinces.
The only moderately bright note in the taxpayers’ report card was tax relief, where the Ford government finally made permanent a longstanding 5.7 cent per litre gas tax cut.
Unfortunately, that cut is not typical of the Ford government’s performance on taxes.
to cut corporate taxes and personal income taxes remain unfulfilled. Ontario’s combined federal/provincial top marginal tax rate of 53.53 per cent is the third highest of any jurisdiction in Canada or the U.S.
The Ford government takes a lot of money from Ontarians through personal income taxes, sales taxes, heath-care taxes and education property taxes. This year, annual personal income taxes will be $20 billion higher than they were in 2019–20. The sales tax take is up $11.5 billion. Corporate tax has risen by $10.6 billion. Where does all the extra money go?
Here, at least, there is some reassuring news. The health, education and post-secondary sectors have all benefited substantially from the increased tax take. In 2019–20, health spending was $63.7 billion. In 2025–26, it is projected to be $91.1 billion. Comparing the same two time periods, education has gone from $30.2 billion to $41 billion and post-secondary spending will rise from $10.5 billion to $13 billion.
Combined spending in those three sectors has gone up just under 40 per cent, in line with the overall revenue and spending increase. With that kind of increase in spending one would expect to see marked improvements in those three areas. There have been some in health, not much in public education or post-secondary.
Three factors have muted the effects of increased government spending. The first is inflation. Between 2019 and now, it has increased 19 per cent. That means government has to spend a lot more money just to keep service levels the same. There are also significantly more people using services. In 2019, Ontario had a population of 14.5 million. Now it’s 16.1 million. And let’s not forget the cost of that accumulated debt. Interest and debt servicing has risen from $12.5 billion to $16.2 billion this year.
The provincial government and its taxpayers are on a treadmill, paying more every year without seeing big improvements in key spending areas. The fundamental problem is that economic growth is not strong enough to provide the taxes the province requires.
Growth in Ontario has been
since 2000. Gross domestic product per capita in Ontario used to be 4.9 per cent higher than the rest of Canada. By 2023, it was 3.2 per cent lower.
The Ford government has desperately tried to promote growth, pouring money into infrastructure and “investing” billions in electric vehicle battery plants. So far, it’s not working and Ontarians continue to pay the price with high taxes and mediocre service levels.
National Post
randalldenley1@gmail.com
