Modest rebound predicted in ’24

Ford has enough room to spend more on health, education, watchdog says

Ontario should see a “modest” rebound from the slowing economy next year with growing revenues and budget surpluses that raise questions about the Ford government’s deficit projections, Ontario’s independent Financial Accountability Office says.

In its latest report on government finances, the watchdog agency forecasts a provincial deficit of $2.5 billion this fiscal year — dramatically lower than the $12.9 billion of red ink projected in Finance Minister Peter Bethlenfalvy’s fall economic statement last November.

The analysis released Tuesday finds Premier Doug Ford’s government will have $12.5 billion in “excess funds” over the next three years, with projected shortfalls of $5 billion in health spending and $1.1 billion on education.

“There’s enough money in the overall spending plan for the government to top up health by $5 billion and education by a billion should they choose,” chief financial accountability officer Peter Weltman told a news conference.

Opposition parties said the report shows Ford is holding back resources needed to improve health care — where patients are struggling with long waitlists as hospitals cope with staff shortages — and education, with students are trying to catch up after months of online learning because of COVID-19.

Accusing the Progressive Conservative government of “deliberately underspending,” New Democrat MPP and finance critic Catherine Fife (Waterloo) said Ford “should be investing in the services that people need, not stockpiling funds.”

“I am extremely concerned that Ford is taking money from health care and education and putting it in ‘contingency funds’ that are unallocated and not transparent,” she added in a statement.

Weltman repeated his own concerns from last fall that a government contingency fund that has grown to $3.5 billion annually from the traditional $1 billion is “pretty high.”

“It does impinge on transparency,” he told reporters at the same time Ford was in Ottawa with provincial and territorial leaders, working on a new health funding deal with Prime Minister Justin Trudeau.

“This is something I do feel the government needs to take a harder look at. It’s not a habit I would like to see,” Weltman added on the large contingency fund.

Liberal MPP and finance critic Stephanie Bowman (Don Valley West) said, “The people of Ontario need to know how much is truly being squirrelled away and why it isn’t being spent on fixing our health care or improving our schools.”

“The Conservative government pretends that they do not have the money needed to pay health care or education workers the wages they deserve,” Bowman, an accountant, added in reference to Ford’s court challenge of a ruling that struck down his Bill 124 wage restraint legislation.

The controversial law capped raises for most public sector workers at one per cent annually and has been blamed for high turnover rates among hospital nurses after three gruelling years of COVID-19.

Overall, Weltman said, Ontario’s economic recovery from the pandemic is expected to slow “sharply” this year before a recovery in 2024.

Weltman’s office forecasts provincial growth as measured by gross domestic product will fall to just over 0.5 per cent in 2023 — down from 5.2 per cent in 2021and an estimated 3.7 per cent last year before picking up steam again in 2024.

“The doom and gloom is not going to be as bad as people are afraid of,” he said, referring to fears of a recession.

“We’re going to start seeing some recovery largely because we’re seeing inflation drop now … our sense is things will start to get better.”

Weltman’s office expects government revenues to grow by 3.6 per cent annually through the 2026-27 fiscal year, with revenues $1.7 billion higher than Bethlenfalvy has projected for this fiscal year and narrowing to $700 million higher in two years.