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Ford government projects lower deficit in first financial update since controversial cuts

Ontario says it will now beat its deficit target by $1.3 billion over the next year, although the provincial deficit continues to grow under the Ford government.

The updated numbers were released Wednesday in the Progressive Conservatives’ fall economic outlook.

The government is now forecasting a deficit of $9 billion for the 2019-20 fiscal year. The province previously said the deficit would be $10.3 billion in its budget released last spring.

“Over the past 16 months under the leadership of Premier Ford, we have made considerable progress,” Finance Minister Rod Phillips told the Legislature.

Finance Minister Rod Phillips of Ontario will deliver a fall economic statement, followed by a media availability and reaction from Ontario NDP Leader Andrea Horwath. 0:00

“We worked diligently to reduce wasteful spending, fix inefficiencies and make government smarter.”

However, the Tories’ projected deficit remains higher than last year’s figure, which was calculated at $7.4 billion, according to 2018-19 public accounts.

The government says it remains on track to balance the budget by 2023-24, after the next provincial election.

New investments and changes

While the Ford government is touting an additional $1.3 billion in investments over its spring budget document, the vast majority of that is made up of previously announced spending.

That includes $637 million on children’s and social services, $404 million on health care and $186 million on education.

Some of that spending was announced after the government came under intense scrutiny for certain cuts, including those to education and the Ontario autism program.

Parents and educators protested at Queen’s Park following cuts to Ontario’s autism program announced in the spring budget. The PC government has since rolled back many of those cuts. (Evan Mitsui/CBC)

The Ford government has walked back some of those cuts since the spring budget, which it is now counting as additional spending in Wednesday’s fall economic outlook.

Some of the newly announced investments and initiatives include:

  • Reducing the small business Corporate Income Tax rate to 3.2 per cent from 3.5 per cent, effective Jan. 1, 2020.
  • Reducing the aviation fuel tax rate to 2.7 cents per litre from 6.7 cents per litre.
  • Allowing free access for children to attractions, museums, galleries and historic sites (No start date has been announced).

Ontario says the reduced small business tax rate will save businesses $70 million in its first year.

The aviation tax cut is designed to save money for residents in Northern Ontario by making air travel more affordable.

Cannabis revenue up, new rules on the way

Ontario has also significantly increased its forecasted revenue from cannabis sales. In the spring budget, the PCs said they anticipated $75 million in revenue over the coming year. The government now says it expects to take in $140 million during the same period.

The financial outlook also calls for changes to the way cannabis can be sold in Ontario.

The PCs are proposing that licensed producers be allowed to open retail stores at their production sites. That move “would further increase consumer access to legal retail stores,” according to the document.

The Ford government wants to let private retailers sell cannabis online. That method of shopping is currently only available at the publicly owned Ontario Cannabis Store. (Sean Kilpatrick/The Canadian Press)

There are also plans to allow existing retailers to sell cannabis online and to allow stores to take phone orders that customers could pick up in store.

Both changes would require amendments to existing legislation.

A conciliatory tone

After enduring months of protests and ongoing labour unrest with various teachers’ unions, the Ford government appears to be taking a more conciliatory and collaborative approach.

Phillips previously called it “an approach that reflects changing circumstances, what we’re hearing from Ontarians.” 

The fall economic outlook does not appear to contain any further spending cuts over the sometimes-controversial spring budget.

The government has also announced plans to hold a series of consultations before it releases its next budget in 2020.

Ontario residents, businesses and other organizations are invited to take part.

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