The Ford government has tabled a confident, spendy, stay-the-course Budget.
At $204 billion, Minister of Finance Peter Bethlenfalvy had the honour this afternoon of introducing the biggest-spending budget in Ontario history. Building A Strong Ontario can only be called good news from the government’s perspective: revenues are up, deficits are down, and the province will balance the budget in 2024-25, well ahead of the next election in 2026.
Against a backdrop of rising interest rates, continuing inflation, constrained supply chains, persistent labour shortages and fears of a looming recession, it is critical for the government to focus on mitigating uncertainty and constructing the right conditions to support competitiveness and long-term economic growth.
Although faced with controversy and criticisms around the private delivery of health care, health human resources challenges and Greenbelt development, the Progressive Conservative government’s favourability remains strong across the province. With a focus on upcoming challenges Ontarians may face in what Bethlenfalvy refers to as “uncertain times”, the government’s budget puts emphasis on a prudent approach that leaves breathing room for any surprises or shocks, ensuring Ontario is ready to address economic pressures.
The budget lacks major new marquee initiatives, with much of what is in it having already been announced over the last few months. The $204.7 billion budget surpasses last year’s spending by more than $6 billion. The 186-page budget puts a heavy emphasis on support for industry, offering tax relief to manufacturers and small businesses while pledging millions towards expanding surgeries at private clinics. The budget’s two sections – “Building Ontario” and “Working for You” – are consistent with Ford’s populist emphasis on infrastructure building and customer service.
The budget is further broken into six key initiatives:
- Building Ontario’s Economy for Today and Tomorrow
- Building Highways, Transit, and Infrastructure Projects
- Working for Workers
- Keeping Your Costs Down
- Better Services for You
- Protecting You and Your Family
Interestingly, the budget contains none of the $423 million in relief asked for by the City of Toronto.
- For the fiscal year that ends March 31, Mr. Bethlenfalvy is predicting a $2.2-billion deficit, down from the $6.5 billion projected just last month.
- The government is projecting a deficit of $1.3 billion in 2023-2024 and a small surplus of $200 million in 2024-2025.
- Included in the fiscal plan is about $81 billion for health care, $34.7 billion for education and $38.1 billion in “other programs”.
- For 2023-34, $4 billion has been placed in a contingency fund for emergencies. The province’s normal $1 billion reserve fund, applied to reduce the deficit if it is not needed, will grow to $2 billion in 2024-25 and $4 billion in 2025-26.
As the government works to strengthen health care after three high-spending pandemic years that stretched the system to its limits, it faces no shortage of challenges – or critics. With the Health Minister’s focus on legislation working its way through the House that will enable a greater role for private delivery of public health care, and ongoing health human resources and system capacity challenges to deal with, the budget steers a cautious course.
There were no major surprises in the government’s health budget, with investments largely mirroring Deputy Premier and Minister of Health Sylvia Jones’s recent “Your Health Plan”, including more investments in community paramedicine programs, expanded 9-1-1 models of care and additional medical training seats for health workers across the province.
The budget includes mention of the health deal recently secured “in principle” with the federal government, with a one‐time top‐up in 2023–24 to address urgent needs. The budget clearly indicates that while the federal deal will provide Ontario with $4.4 billion over three years, Ontario’s incremental spending on health care is $15.3 billion over three years starting in 2023–24. This is consistent with the communique from Canada’s premiers following the Feb. 1 Ministers’ meeting, where provinces made a case for more sustainable and sufficient funding.
The government has clearly stated pandemic funding programs have now come to a close, and the focus has shifted toward supporting the health system in the medium-to-long-term to improve the “patient experience”, terminology we have also heard the Minister of Health reference before. The budget also doubles down on the government’s:
- Health transformation agenda with an additional $60 million over two years to expand existing primary care teams and create 18 new primary care teams;
- Strategy to address surgical and diagnostic backlogs outside of the public hospital system with $72 million in 2023-24 earmarked for community surgical and diagnostic centres or independent health facilities;
- Home care and community care plan with approximately $269 million additional funding in 2023-2024 to support contract rate increases to stabilize the workforce;
- Mental health and addiction plan, with a new investment of $425 million over three years, in addition to the $3.8 billion over 10 years earmarked for the Roadmap to Wellness, to support community mental health and substance use organizations with a five per cent base funding increase, among other investments. This is significant – a top priority for the sector – and a departure from the government’s previous program-based funding.
The budget also included re-announcements and reiterations of previously announced initiatives such as the Life Sciences Innovation Fund, a $15 million early‐stage fund to help life sciences entrepreneurs, launched last year, and the creation of an industry‐led Life Science Council to provide advice on the sector and identify opportunities for increasing competitiveness.
Going forward, with a plan to balance the budget by 2024-2025, while Minister Bethlenfalvy recently made clear that the government will not be “cutting its way to prosperity”, we can anticipate a more fiscally prudent approach with the government continuing to focus on “providing care in community” and “training the health care workforce of the future.”
Transportation + Infrastructure
The Ford government has made transportation infrastructure investment central to its appeal in the vote-rich Greater Toronto Area, while also reaching out to new constituencies in Ontario’s North. With the goal of fighting gridlock, the 2023 budget announced infrastructure investments totalling more than $184 billion over the next decade, with $27.9 billion being allotted to supporting the planning and construction of highway expansion and rehabilitation projects across Ontario, and $70.5 billion towards public transit investment.
Within this framework, Budget 2023 announced that it would:
- Eliminate double fares for transit authorities in the Greater Golden Horseshoe when commuters also use GO Transit services.
- Expand the credit card contactless payment system used by the Toronto Transit Commission (TTC), and introduction of debit tapping payment capability to all transit systems in the Greater Toronto and Hamilton Area (GTHA).
- Invest $139.5 million for three new trainsets to reinstate the Northlander passenger rail service between Timmins and Toronto.
- Commit an additional $5 million in annual funding for Winter Roads Program enhancements in the province’s far north.
The budget was also a display of the Ontario government’s willingness to stay the course on several previously announced transportation projects, including renewed commitments to projects including the construction of Highway 413 and the Bradford Bypass; investing in the GO Transit expansion; constructing the Hazel McCallion Light Rail Transit line, Ontario Line Subway, and Scarborough Subway extension; and the development of transit-oriented communities.
Energy + Natural Resources
The 2023 Ontario budget demonstrated the government’s continued focus on energy and natural resources as a key driver of Ontario’s long-term prosperity. With a spotlight on developing the Ring of Fire and reducing administrative burden to open new mines, while also expanding funding for exploration, government is promising increased access to energy for large industrial customers and reduced rates for industrial consumers. Minister Bethlenfalvy and Premier Ford have set the stage for a busy year ahead on the energy and natural resources file.
It is clear the government sees the nuclear industry as an important part of the province’s clean energy future. While touting their work towards opening what will be Canada’s first small modular reactor (SMR) at Darlington, they are also announcing a new, voluntary Clean Energy Credit registry – making clear that they consider nuclear to be a source of clean energy alongside more traditional sources such as hydro and solar. This classification is sure to be controversial in some corners, but it’s clear that nuclear will continue to be central to Ontario’s energy sector.
Key measures include:
- A commitment of close to $1 billion to support critical legacy infrastructure such as all-season roads, broadband connectivity and community supports for the Ring of Fire region.
- Directing the Independent Electricity System Operator (IESO) to acquire 4,000 MW of new electricity including a target of contracting a minimum of 1,500 MW of energy storage capacity.
- Shifting a portion of the costs of non‐hydro renewable energy from ratepayers to government under the Comprehensive Electricity Plan, lowering bills by about 14 to 17 per cent on average for medium- and larger-sized industrial and commercial consumers.
- Expanding the Northern Energy Advantage Program for eligible mining, forestry and steel operators in Northern Ontario, and removing the $20 million funding cap per participant.
- Launching a voluntary clean energy credit (CEC) registry, which provides businesses with a tool to demonstrate that their electricity has been sourced from clean resources, such as hydroelectric, solar, wind, bioenergy and nuclear power. Funds generated through the purchases of CECs could be returned to ratepayers
Housing + Affordability
With an acute housing crisis and rapidly rising cost of living, Ontarians are looking to the provincial government to take concrete steps to make housing more accessible and reduce incremental costs at a time when grocery and energy bills are higher than ever. Budget 2023 includes promises to add more than a million new homes over the next decade, as well as new investments to tackle homelessness in the province and streamline processes for the Ontario Landlord and Tenant Board.
Key measures include:
- Committing to build 1.5 million homes by 2031, which will create 72,000 additional construction jobs.
- Investing an additional $202 million each year in the Homelessness Prevention Program and Indigenous Supportive Housing Program. This is in addition to $4.4 billion over the past three years to supplement community and supportive housing, respond to COVID‐19 and address homelessness for vulnerable people.
- Investing $24 million in the Ontario Land Tribunal and Landlord and Tenant Board over three years to clear backlogs, streamline processes and help address housing needs.
With rising interest rates, bank failures in the United States, and bank rescues in the US and Europe, some Ontarians are getting nervous about the stability of the global financial system. Budget 2023 contained several measures to shore up trust in Ontario’s financial services, not only to help protect Ontarians against growing cases of fraud but also to solidify the pillars of Ontario’s financial and real estate sectors as they weather growing economic headwinds.
Key measures include:
- Enhancing consumer protection through proposed amendments to the Insurance Act to support the Financial Services Regulatory Authority of Ontario (FSRA) in ending the use of deferred sales charges in the sale of segregated funds.
- Working to ensure consumers and investors receive appropriate advice when they obtain a mortgage. On April 1, 2023, new licensing classes for mortgage brokers and agents will be introduced in Ontario with enhanced education and experience requirements that focus on mortgage products funded by private lenders.
- Reaffirming measures introduced by the Ontario Securities Commission (OSC) to improve access to capital for companies and access to markets for investors – including new prospectus exemptions, streamlined regulatory reporting requirements, and expanded eligibility for sophisticated investors.
- Investing $3 million over three years to support effective risk management, through the Global Risk Institute.
Working for Workers
Doug Ford’s populist Conservative vision has placed workers at the centre of his electoral coalition – with key assistance from Labour Minister Monte McNaughton, winning endorsements in last year’s election from key unions and eating into traditional Liberal and New Democrat constituencies. This year’s budget continues to the trend of supporting workers and addressing a persistent labour shortage, with over 300,0000 unfilled jobs, particularly in health care and construction.
The measures in the budget aim to make it easier for job seekers, newcomers, and students to get the needed training in order to fulfill some of these shortages. The focus is largely on training, and opportunities for Ontarians to enhance their credentials and support their education.
Key measures include:
- $75 million over the next three years for the Skills Development Fund.
- $224 million in a new capital stream of the Skills Development Fund to leverage private-sector expertise and expand training centres, including union-led training halls.
- Additional $15 million over the next three years to Better Jobs Ontario to provide applicants with funding to cover expenses such as childcare, tuition, and transportation for short-term training programs.
- $25 million over three years in the Ontario Immigrant Nominee Program.
Ontario’s newly-minted NDP Leader Marit Stiles was quick to condemn what she sees as a lack of investments in the key priorities of ‘the moment’. “This budget is a failure of leadership – true leaders meet the moment. This one is out of touch,” she said. The NDP leader pointed to six key problems with the budget, including a lack of funding for municipalities, no new money for housing despite a promise to build 1.5 million homes, no minimum wage increase, no increase in base funding levels for education and no rent control to help stem the cost of living crisis.
In reaction to the budget, Interim Liberal Leader John Fraser stated: “Ontario families, they’re not feeling the balance.” The Liberals pointed out that government has spent much time being prudent, but few measures on tackling affordability for Ontarians. He noted the government has refused to renew the three paid sick days program, introduced no investments toward clearing waitlists to access autism services, maintains a salary cap on nurses and other frontline health workers, rejected an increase to the Ontario Child Benefit, and allowed rent and utility costs to skyrocket.
What Happens Next
Now that the budget has been tabled, there will be debate on the budget motion—whether the Legislature supports the government plan in principle—which must be completed within 12 sessional days of the budget’s tabling (in practice, about a month from now). At the same time, the House will consider a corresponding budget bill, which includes new laws and amendments needed to implement the government’s plans. This follows the typical process for all legislation, including an opportunity for stakeholders to provide input during Committee consideration. It will likely come to a vote soon after the budget motion.
With a strong majority, both motion and legislation will surely pass. This will be followed by the tabling of the Estimates, which outline government spending plans in more detail, likely in May. Some of the regulations associated with the budget bill will also take time to develop. While we don’t expect major changes from today’s plan, the Estimates and regulation-making provide some runway and wiggle room for stakeholders to influence the final shape of government spending and policies for the year to come.
In this, and in all your public affairs and government engagement work, your experts at H+K are ready to collaborate with you to advance your objectives and understand how political and policy decisions impact your business.
Authored by Will Stewart, Matt Boudreau and Shanice Scott.