Ford government promises billions in new spending in fall economic statement

ANALYSIS: The Progressive Conservatives have made a fiscal about-face, abandoning spending restraint — and committing big money to various programs
By John Michael McGrath - Published on Nov 06, 2019
Ontario finance minister Rod Phillips
Finance Minister Rod Phillips unveiled the Tory government’s fall economic statement at Queen’s Park on Wednesday. (John Michael McGrath)

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“Protecting what matters most” is out. “Building Ontario together” is in.

This year’s fall economic statement, released by Finance Minister Rod Phillips at Queen’s Park on Wednesday, outlines billions of dollars in new spending for the coming years, substantially increasing provincial outlays relative to what was projected in the spring budget. The projected deficit for this fiscal year is $9 billion (final numbers will come in next year). The 2018-19 deficit was reduced substantially — to $7.4 billion — earlier this fall, meaning that this year’s deficit is expected to be larger than last year’s, notwithstanding the public pain the Tories incurred for their budget restraint.

Then there’s the projected program spending — the government money that goes to actual people and services, not debt. The government intends to spend an additional $2 billion in 2020 and 2021 above what was already planned in the spring budget; the new plan is for the province to spend $5 billion more overall than it will in 2019-20. Five billion isn’t a huge number in the context of the province’s $164 billion expenses, but it can still matter: the Tories had a terrible first six months of 2019 because of the cuts embedded in a budget that expanded program spending by only $100 million — substantially less than basic inflation. The original spring budget, presented by then-minister Vic Fedeli, allocated an additional $1.8 billion to program spending next year; this new budget plans to double that.

To put it another way: the program-spending increases the Tories are projecting are roughly equivalent to the ones we saw under the Liberals from 2014 to 2016 (before the Kathleen Wynne government boosted spending substantially in 2017). This marks a pretty significant turnabout for a Progressive Conservative government elected in opposition to all things Liberal: the Tories tried austerity and shrinking the government, and it was so politically painful they’ve opted for a substantially gentler approach to balancing the provincial budget.

Where is this new money coming from? Better-than-expected economic growth and the increased tax revenue that comes with it, for the most part. The Tories have enough fiscal room to both increase spending and cut corporate income taxes for small businesses, from 3.5 to 3.2 per cent.

Here are some other notable items from this year’s fall mini-budget.

The reversals keep coming

Last year’s fall economic statement included a raft of changes to francophone services: in it, the Tories ended the role of the French-language services commissioner as its own independent office, for example, and abandoned a promise to build a francophone university. Such controversial changes cost the government one of its MPPs, Amanda Simard, who has sat as an independent ever since.

This year’s fall economic statement tries to give the francophone community some attention (although no substantial new money): it reiterates some of the major announcements that the Tories have already made this year, including a new program for cultural grants and a new agreement with the federal government to build a francophone university.

There’s also a new “Premier’s Advisory Council on Competitiveness,” the stated mission of which is to improve the competitiveness of Ontario’s economy. If that sounds like the kind of thing someone should have thought of before now, that’s because someone did: then-premier Mike Harris established the Institute for Competitiveness and Prosperity in 2001; it was shut down last year after its provincial grants were cancelled.

Carbon-tax silliness continues

Anyone looking for signs of reasonableness from the Tories on carbon pricing will be disappointed: despite the recent federal-election results, the fall economic statement reiterates that the government will keep fighting the federal carbon tax in court. The Supreme Court of Canada is expected to hear the case in March 2020.

In other climate-change news: Ministry of Finance projections still don’t anticipate a carbon-tax-related recession in Ontario — notwithstanding the premier’s warnings early this year.

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