The Top Line
Finance Minister Peter Bethlenfalvy today released the Ford government’s fiscal plan for 2024. In keeping with his pre-budget announcements, the Minister focused on strengthening the economy with additional spending while holding the line on tax increases. He has taken what he calls a “prudent and responsible approach”, despite significant spending increases.
The budget is defined by two main themes:
Building a Better Ontario
- Rebuilding Ontario’s economy
- Building Infrastructure
- Highways and Transit in your Communities
Working for You
- Working for workers
- Keeping costs down
- Better services for you
The budget highlights recent government announcements that focus on strengthening the economy, including more money for housing, infrastructure development and attracting additional manufacturing opportunities to the province. At the same time, the Minister continues his policy of no tax increases leading to a predicted deficit in 2024-25 of $9.8 billion, a very significant increase from the $3 billion in 2023-24. Today’s budget projection now only has the budget returning to a balanced position after the 2026 fiscal year.
Specifically, the budget also supports recent announcements that will see the 5.7-cent per litre cut to the gas tax extended until the end of the year and promises new measures to clamp down on contraband tobacco, an escalating challenge costing Ontarians nearly $1 billion annually.
Minister Bethlenfalvy stated that you can choose to slow down and not spend or keep going which requires additional spending.
Budget Highlights
Building a Better Ontario
Rebuilding Ontario’s Economy:
- Ontario’s capital plan exceeds $190 billion over 10 years, focusing on highways, transit, high-speed internet, and housing-enabling infrastructure and doubling the Ontario Community Infrastructure Fund to nearly $2 billion over five years to support 425 communities by 2025
- The Building Ontario Fund, a new infrastructure bank, will receive an initial $38 million to attract capital for critical projects.
- Allocating an additional $100 million to the Invest Ontario Fund for attracting investments and new jobs.
Highways and Transit in Your Communities:
- Investments in highways and transit aim to boost the economy, reduce congestion, and improve job access. Projects include new interchanges in Windsor and Ottawa, Highway 7 expansion, improvements to Highway 401 and 413, building the Bradford bypass, support for Milton GO rail expansion, extension of Hazel McCallion LRT Line in Mississauga, and reviving the Northlander rail service to connect Toronto to Timmins, with a link to Cochrane.
Working for You
Working for Workers
- Investing an additional $100 million in 2024–2025 in the Skills Development Fund Training Stream and continuing to implement the $224 million Skills Development Fund Capital Stream
- Investing an additional $16.5 million annually over the next three years through the Skilled Trades Strategy
Keeping Costs Down
- Extend the temporary cut to the gasoline tax rate by 5.7 cents per litre and the fuel (diesel) tax rate by 5.3 cents per litre until December 31, 2024.
- Increasing income eligibility thresholds for the Ontario Electricity Support Program (OESP) up to 35 per cent
Better Services for you
- Connecting approximately 600,000 more people to primary health care through interprofessional primary care teams (total additional investment of $546 million) over three years and helping more people access health care by investing an additional $965 million in operating funding in 2024–2025
- Investing an additional $2 billion to support expansion and increase compensation for frontline workers and investing $743 million over three years to help address immediate health care staffing needs
- Saving daily public transit riders on participating systems an average of $1,600 each year through One Fare
- Investing an additional $152 million over the next three years towards supportive housing initiatives to support vulnerable people
- Investing $172 million for the 2024–2025 school year for math and reading supports and an updated kindergarten curriculum
- Providing an additional $13.5 million over three years, on top of existing investments of $1.4 billion over four years, to enhance initiatives that support women, children, youth and those that are at increased risk of violence or exploitation.
Economic Overview
Ontario will not reach a balanced budget until 2026 – much different than the picture provided last year. This Budget announced the government’s largest spending in Ontario’s history at $214.5 billion. Ontario is also projecting a much lower real GDP growth – high interest rates, high inflation, and big spending are all reasons that have contributed to this. Part of the reason for this deficit is because of legal settlements resulting from the overturn of Bill 124, Protecting a Sustainable Public Sector for Future Generations Act, 2019 – about $6 billion allocated in this budget. Federal cap on international students is also having an impact by leading to lower revenue for post secondary education.
Despite Ontario’s economic landscape remaining fraught with challenges and uncertainties, it exhibits remarkable resilience. This is attributed to the government’s prudent fiscal management strategy, informed by ongoing consultations with the private sector, that prioritizes rebuilding the economy without imposing additional financial burdens.
The economic outlook for Ontario in 2024 appears subdued, largely due to the adverse effects of high interest rates. Real GDP growth is forecasted at 0.3% growth in 2024, and a 1.9% growth in 2025, a significant decline from previous estimates. Employment growth is also slowing down, with a projected rise of only 0.8% in 2024, a notable drop from the 2.4% increase predicted a year ago. Unemployment is expected to rise to 6.7% in 2024, and decline to about 6.2% by 2027. The Government has introduced ‘Faster Growth’ and ‘Slower Growth’ scenarios to provide alternative perspectives on the province’s economic trajectory, acknowledging the multifaceted nature of the challenges ahead. All the Government’s projections are slightly below the private-sector forecasts to ensure prudent fiscal planning.
The government is projecting a deficit of $9.8 billion in 2024–25, $4.6 billion in 2025–26, before transitioning to a surplus of $0.5 billion in 2026–27 – and balancing the Budget. Despite these deficits, revenue projections for 2023–24 are slightly lower than previously forecasted, totaling $204.3 billion. This dip in revenue is primarily attributed to declines in taxation revenue and Government of Canada transfers. Projected revenues have declined significantly for subsequent years. In response, the government has undertaken targeted investments to advance Ontario’s developmental agenda. Despite these expenditures, the total expense outlook is projected to grow steadily, reaching $224.1 billion by 2026–27.
Ontario’s net debt-to-GDP ratio is forecasted to rise slightly to 38.0% in 2023–24, slightly surpassing previous estimates. However, the government remains committed to keeping this ratio below the targeted threshold of 40.0%, underscoring its dedication to long-term fiscal sustainability amidst economic turbulence.
Opposition Reaction
Marit Stiles, Leader, Ontario NDP (Official Opposition)
“Ford’s 2024 Provincial Budget is a missed opportunity for much-needed change”, says Ontario’s Official Opposition NDP leader Marit Stiles.
“If you’re looking for change, Ford’s budget is not for you,” said Stiles.
She says people are looking for homes they can afford and better health care. But instead, the people of Ontario got an uninspired statement from this government that is out of touch and out of ideas.
Bonnie Crombie, Leader, Ontario Liberal Party
“This is a do-nothing budget” said new Liberal Leader Bonnie Crombie, “The Minister concedes economic growth is down and the debt and deficit are up, but he does nothing to help families and local businesses who are struggling,” she said.
Crombie said Doug Ford is refusing to fund education, public services and healthcare we rely on. Instead, he is choosing to undercut public institutions to help his rich friends make more money.
What This Means for You
Budget 2024 holds the line on taxes, a theme that has been consistent in Minister Bethlenfalvy’s budgets since he became Minister in December 2020.
Last year, the Minister began the process of addressing slow economic growth created in the aftermath of the pandemic years. Deficits were predicted for the early years with balance budgets coming in 2 or three years.
Today, the Minister has increased spending in an effort to address key infrastructure challenges and to tackle the housing crisis head-on. This will lead to an almost tripling of the deficit next year to almost $10 billion dollars. However, the Minister does now project a return to surplus following the 2025-26 fiscal year, albeit a year later than previously predicted.
The current economy challenges families and their finances. Today’s budget attempts to deliver a plan designed to attract new and better jobs while keeping costs down for families and small businesses by investing in public services and expanded transit. The new Municipal Housing Infrastructure Program has been created pumping $1 billion dollars into housing and quadrupling the Housing-Enabling Water Systems Fund that was introduced a year ago.
Extending the 5.7-cent per litre cut to the gas tax until the end of the year will be welcomed by Ontario motorists as the federal government increases the carbon tax on April 1st.
In addition to assisting those facing unstable housing conditions and dealing with mental health and addictions challenges, the government has specifically directed $152 million to support vulnerable people.
