Ontario looks to balance the books by 2025, ends paid sick days

The Ontario government has unveiled what the province’s Finance Minister calls a “prudent” budget – one that assumes next to no economic growth this year, but still pledges to balance the books by the 2024-25 fiscal year.

The budget, released Thursday, contains no new marquee initiatives. And it ends the province’s three subsidized sick days for workers, which were brought in during the height of the COVID-19 pandemic.

But it promises to speed up already-planned spending on home medical care for seniors, and new funding for supportive housing and mental-health treatment. And it includes a new refundable tax credit for homegrown manufacturers, and money for skills training, both of which were announced earlier this week.

Finance Minister Peter Bethlenfalvy warned in a speech to the legislature that prudence is needed if the province is to deal with inflation, high interest rates, the war in Ukraine, moves by the United States to ramp up competition for new investment and other uncertainty in the global economy.

The budget assumes there will be an economic slowdown in the province in 2023.

It projects that real gross domestic product growth will be just 0.2 per cent, before rebounding in the following two years. But Mr. Bethlenfalvy is still expecting Ontario to post a surplus within two fiscal years. The budget will set an Ontario record for overall spending, at $204.7-billion.

As in other provinces, Ontario’s predictions of ballooning budget deficits repeatedly evaporated in previous years, as the economy recovered from the pandemic more quickly than expected, boosting government tax revenues.

For the fiscal year that ends March 31, Mr. Bethlenfalvy is predicting a $2.2-billion deficit, down from the $6.5-billion the government projected just last month – and way down from the $19.9-billion in red ink the minister warned of last year. In 202324, the budget says, the deficit will shrink to $1.3-billion. And it projects a surplus in the following year of $200-million. (Ontario previously posted a $2.1-billion surplus in 2020-21, defying predictions of a record deficit that year.)

Despite the rosier picture for Ontario’s balance sheet, the budget contains none of the $423million in relief the City of Toronto has asked for.

The city faces a massive shortfall, because of a hollowing out of public transit ridership caused by COVID-19. Mr. Bethlenfalvy said he had met with Toronto deputy mayor Jennifer McKelvie, and that he has agreed to continue a “dialogue” with Toronto and other cities.

The disappearing deficits have been fuel for the provincial government’s critics. Opposition politicians have pointed to figures from Ontario’s independent Financial Accountability Office that show health care spending failing to keep pace with growing needs. They have criticized Mr. Bethlenfalvy for parking billions in contingency and reserve funds instead of spending the money on struggling hospital emergency departments.

The province’s base health care budget, boosted by the recent federal-provincial funding deal, is set to rise an average 5.4 per cent a year over the next three years, with the province boosting its own previously planned spending.

Mr. Bethlenfalvy made no apologies for what he said are prudent measures to put money aside. For 2023-24, he has again put $4-billion in a contingency fund for emergencies. And the province’s normal $1-billion reserve fund, which is used to reduce the deficit each year if it is not needed elsewhere, will grow to $2-billion in 2024-25 and $4-billion in 2025-26.

“Ontario is not an island, and while we remain resilient, the seas around us are stormy,” Mr. Bethlenfalvy told the legislature. “Our budget must reflect [that], with continued prudence, and planning assumptions that leave room for future surprises or shocks.”

Ontario NDP Leader Marit Stiles told a news conference the budget does nothing to help regular people struggling with rising costs of living. She also pointed to projections in Thursday’s budget document that suggest housing starts in the province are set to sink to 79,000 in 2024, down from 96,000 last year, one of the highest totals since the 1980s.

That’s well shy of the 150,000 a year needed to meet the government’s goal of 1.5 million new homes over the next 10 years – a goal it has used to justify recent housing policies, including its move to open parts of the protected Greenbelt to development.

“Their dismantling of the Greenbelt isn’t doing what they promised,” Ms. Stiles said.

In a statement, the Ontario Liberals slammed the government for “short-changing” families while parking billions in contingency funds.

The budget document also says Ontario will “accelerate” the $1-billion in funding for home medical care it promised in last year’s budget that it would spend over three years. The government says it will now spend $569-million of that cash in 2023-24, including nearly $300-million “to stabilize the home and community care workforce.”

Sue VanderBent, chief executive of Home Care Ontario, an industry group, said the move would lead to better pay for workers, including skilled therapists, nurses and personal support workers.

“It will relieve pressure on our strained hospitals, by reducing admissions and speeding up discharges. Most importantly, it will lead to more home care for people who need it,” she said.

The government is also promising $425-million over three years for mental-health and addiction treatment, including a 5per-cent increase in the base funding for community-based mental-health and addiction services.

Tatum Wilson, CEO of Children’s Mental Health Ontario, which represents 100 public providers of child and youth mentalhealth services, said the new funding is critical to addressing the growing demand for those services in the province.

“Decades of chronic underfunding, the current shortage of mental-health professionals, combined with the toll of the pandemic on our kids is making the situation increasingly dire for Ontario families,” he said in a statement.

The government is also further expanding the list of ailments for which pharmacists will be able to prescribe medication without intervention from doctors, adding acne, diaper rash and other minor medical problems. And, it is adding more student spots in medical schools.

The budget also says that $72million will go toward the province’s recently announced plan to move more surgeries and tests into private clinics, in order to improve waiting times. The plan’s first phase involves doing thousands more cataract procedures in private-sector clinics, outside hospitals.

Sharleen Stewart, president of Services Employees International Union Healthcare, called the budget a “disappointment for health care workers.” She criticized the government for failing to raise wages for registered practical nurses and personal support workers.

The budget includes a handful of new measures aimed at the province’s most vulnerable people.

Ontario will spend an additional $202-million a year on supportive housing and homelessness programs. There is also $170million over three years for a program that supports youth leaving the child-welfare system. The funding will enable the program’s upper age threshold for eligibility to be raised from 21 to 23 years.

The budget includes a pledge to further expand the Guaranteed Annual Income System (GAINS) program for low-income seniors, allowing an additional 100,000 seniors to benefit by July, 2024. Mr. Bethlenfalvy said the details had yet to be worked out.

Ontario is expanding the criteria for allowing larger small businesses to qualify for a discounted small-business income-tax rate.

The budget also says the Ontario government plans to review its entire tax system, with an eye toward “competitiveness and long-term growth.”

Sharleen Stewart, president of Services Employees International Union Healthcare, called the budget a ‘disappointment for health care workers.’