The Top Line
In the first full budget following the large majority win in the 2022 provincial election, the Ontario government is “staying the course” – a phrase often used by Finance Minister Peter Bethlenfalvy leading up to today’s budget release.
Keeping true to recent statements, Ontario Budget 2023 is a budget for “uncertain economic times” and focused on funding for health care, including home and community care, mental-health and long-term care, as well as getting more housing built, moving forward on new highways, public transit and training workers. This makes Budget 2023 the largest spending budget in Ontario’s history at $204.7 billion.
As Bethlenfalvy has done in the past two budgets, Budget 2023 contains no new taxes or spending cuts. Rather the emphasis continues to focus on the issues conservatives have emphasized since coming to power in 2018, namely services and projects designed to get Ontarians working again and re-establishing the economic engine of the country, including the phase out of pandemic incentives.
Budget Highlights
Building A Strong Ontario
- Planned infrastructure spending of more than $184 billion over 10 years including:
- $27.9 billion to support the planning and construction of highway expansion and rehabilitation projects
- $70.5 billion for transit over the next 10 years, including continuing to transform the GO Transit rail network; and the largest subway expansion in Canadian history in Toronto that includes the Ontario Line, the Scarborough Subway Extension, the Yonge North Subway Extension and the Eglinton Crosstown West Extension
- Over $48 billion in hospital infrastructure over the next 10 years
- Advancing Ontario’s Critical Minerals Strategy, including Ontario-based EV and battery manufacturing
- Additional $3 million in 2023–24 and $3 million in 2024–25 in the Ontario Junior Exploration Program to help more companies search for potential mineral deposits and attract further investments in this growing sector
- Over $16 billion in investments towards EV batteries and battery materials in order to position Ontario as a global leader on the EV supply chain
- Launching the new Ontario Made Manufacturing Investment Tax Credit, which would provide a 10% refundable Corporate Income Tax credit to help local manufacturers lower their costs
- Estimated $8 billion in cost savings and support for some Ontario employers in 2023, $3.6 billion going to small businesses. That includes expanding access to the small business Corporate Income Tax rate by increasing the phase-out range
- Launching a voluntary clean energy credit registry that provides businesses with a tool to meet their environmental and sustainability goals
- $15 billion in capital grants over 10 years to expand and renew schools and to help create 86,000 new child care spaces by December 2026
Working for You
- $224 million in 2023–24 for a new capital stream of the Skills Development Fund
- Additional $25 million to enhancing the Ontario Immigrant Nominee Program with an over three years to attract more skilled workers
- Expanding the Ontario Bridge Training Program with an additional $3 million in 2023–24 to help internationally trained immigrants find employment in their fields and get faster access to training and supports towards a licence or certificate
- Continuing to provide gas tax and fuel tax rate cuts until December 31, 2023
- Providing financial support to more seniors by proposing changes to expand the Guaranteed Annual Income System program, starting in July 2024
- $202 million each year towards supportive housing and in the Homelessness Prevention Program and Indigenous Supportive Housing Program
- Helping more Ontario students become doctors by investing an additional $33 million over three years to add 100 undergraduate seats beginning in 2023, as well as 154 postgraduate medical training seats
- Expanding the program to allow pharmacists to prescribe over-the-counter medication for more common ailments starting fall 2023
- Invest $1 billion over three years to get more people connected to care in the comfort of their own home and community
- Accelerating investments to bring funding in 2023–24 up to $569 million, including nearly $300 million to support contract rate increases to stabilize the home and community care workforce
- Additional $425 million over three years to support mental health and addictions services, including a 5% increase in the base funding of community-based mental health and addictions services providers funded by the Ministry of Health
- $13.4 million in 2023–24 as part of the Guns, Gangs and Violence Reduction Strategy
Economic Overview
Ontario Finance Minister Peter Bethlenfalvy tabled the province’s annual budget with a vision to balance the books in the province. Despite unprecedented spending, today’s budget aimed to find a balanced approach, with strategic investment to further grow the province’s economy. Relying on surging revenues, Bethlenfalvy claimed that the government will return provincial coffers to ‘black years’ earlier than previously projected. This year’s fiscal plan included historically high spending and tax relief for businesses but excluded efforts to address affordability initiatives to support individuals.
Budget 2023 is projecting to balance the budget in 2024–25, three years earlier than forecast in the 2022 Budget. For 2022–23, the government is projecting a deficit of $2.2 billion. In this upcoming fiscal year, the province expects a $1.3 billion deficit — a figure roughly 12 times lower than that cited last April. A future surplus could increase to $4.4 billion by 2025–26.
With roughly $200 billion in revenue this year, revenues have increased by $20.6 billion, largely driven by higher taxation revenue. This has assisted in expediating the government’s projection on when they eliminate the deficit. By 2025-2026, the last year covered by today’s budget, total revenue is expected to reach $226 billion. Analysis associated the drastic increase over previous projects are due to inflation, higher taxation revenues (personal and corporate income tax), higher federal transfers, and increased in other non-tax revenues such as from post-secondary institutions with the return of international students to Canada.
With the increase in flow of revenue, the 2022–23 total expense outlook is $202.6 billion, an estimated $3.9 billion higher than the 2022 Budget. The total program expense is projected to grow from $189.1 billion in 2022–23 to $202.5 billion in 2025–26, representing an annual average increase of 2.3 per cent. Capital plan spending by the provincial government has increased significantly, with $184.4 billion allocated for major infrastructure projects such as highways, hospitals and schools over the next 10 years. This is approximately $25 billion more than was announced in the last budget.
In terms of the economy, Budget 2023 claims that real GDP increased by an estimated 3.7 per cent in 2022 and is projected to increase by 0.2 per cent in 2023, 1.3 per cent in 2024, 2.5 per cent in 2025 and 2.4 per cent in 2026. These projections are below the average of current private-sector forecasts. The net debt-to-GDP ratio is projected to be 37.8 per cent in 2022-23 – the lowest level since 2011–12. Over the medium-term outlook, Ontario’s net debt-to-GDP ratio is now forecast to be 37.8 per cent in 2023-24, 37.7 per cent in 2024–25, and declining to 36.9 per cent in 2025–26.
Opposition Reaction
Marit Stiles, Leader, Ontario NDP (Official Opposition)
Ontario’s new Official Opposition NDP leader, Marit Stiles, said Ford’s budget fails to meet the moment and offers no relief for the everyday Ontarian.
“This budget is a failure of leadership – true leaders meet the moment. This one is out of touch,” said Stiles.
Instead, Stiles indicated disappointment in more monies not being directed to permanent paid sick days for workers, doubling of Ontario Disability Support Program, Ontario Works program, protection of the Greenbelt, surgery backlogs and wait times.
John Fraser, Interim Leader, Ontario Liberal Party
The Ontario Liberals believe Ontario families won’t feel the balance. They believe today’s budget offers no relief to Ontarians because it refused to renew the three paid sick day program, enabled rents to rise, and presented no investments to clear the waitlist for autism services.
“The Ford Conservatives could balance the budget without neglecting the health and wellbeing of everyday Ontarians,” said MPP John Fraser, Interim Leader of the Ontario Liberal Party. “Instead of investing in the services Ontarians desperately need, they are quietly underfunding critical services and programs,” he said.
Mike Schreiner, Leader, Green Party of Ontario
Ontario Green Party Leader Mike Schenirer calls this budget a “head-in-the-sand budget.” “Not only is this failure to act bad for people – it’s bad fiscal policy,” he said.
What This Means for You
Budget 2023, with its theme of “Building a Strong Ontario” follows on the governments 2022 election platform and subsequent economic plan laid out in the Fall Economic Statement last November.
After unprecedented spending in response to the COVID‐19 pandemic, the government is continuing to get the province back on a path to fiscal balance. In fact, this budget moves up the anticipated balanced budget to 2024–25, three years earlier than expected just last year.
This is the largest spending budget the province of Ontario has ever tabled at almost $205 billion. With $81 billion (40%) towards the health sector, and the education/post-secondary sector at $46.8 billion (23%), the government is focusing on the high-profile sectors with a significant investment in infrastructure across the province.
The budget also identifies a number of sectors for modernization and attention, by adapting modern practices. The Building a Strong Ontario Act (Budget Measures), 2023 contains proposed amendments to the following:
- Dedicated Funds for Public Transportation Act, 2013
- Financial Professionals Title Protection Act, 2019
- Fuel Tax Act
- Gasoline Tax Act
- Insurance Act
- Liquor Tax Act, 1996
- Ministry of Revenue Act
- Ontario Guaranteed Annual Income Act
- Taxation Act, 2007
- Tobacco Tax Act
Look for the government to stay the course and continue on its fiscally prudent plan in the next year. However, the increase in spending and identification of areas needing continued upgrading, leave ample space for private sector assistance.
