Ontario government’s spending habits belie claims of fiscal restraint

Premier Ford recently stressed the importance of fiscal discipline during a media availability in Toronto. While this is an encouraging sign, his actions will have to speak louder than words in his government’s upcoming budget.

During his media availability at a Shoppers Drug Mart, Premier Ford said “I always have to be a prudent fiscal manager with the taxpayers’ money” and “we just can’t be out there spending willy-nilly.” These statements are undoubtedly true on their own, but the premier must follow his own advice as the Ford government has a track record of spending willy-nilly and being anything but a prudent fiscal manager with taxpayer money.

In April 2019, the Ford government tabled its last budget before COVID, laying out plans for government finances in a 382-page budget document, which included detailed projections for provincial revenues, spending, deficits and debt between 2019/20 and 2023/24. This plan projected government spending (excluding interest costs) would reach $155.8 billion in 2022/23 and $157.7 billion in 2023/24.

Unfortunately, the government did not stick to its own spending plan as the years passed. Instead, Premier Ford engineered a dramatic ramp up in spending that greatly exceeded previous forecasts. In the November 2022 fall fiscal update, the government announced spending would reach a projected $185.2 billion in 2022/23 and $185.0 billion in 2023/24.

To put these numbers in context, Ontario’s spending (excluding interest costs) is forecasted to be $29.4 billion higher than previously projected for 2022/23 and $27.3 billion higher in 2023/24. Put differently, the Ford government plans to spend nearly $57 billion more over just a two-year period compared to its own previous estimates.

Although economic circumstances have certainly changed since 2019 and COVID-related costs played a significant role in boosting spending in 2020 and 2021, there doesn’t appear to be a good reason why projections for provincial spending have ratcheted up so substantially in subsequent years.

COVID is largely not to blame for the spending increases in 2022 and 2023 by the Ford government. The increases were primarily discretionary decisions made by the government and represent an imprudent approach to Ontario’s finances.

Fortunately, the government has seen revenues surge significantly higher than what it expected in the past. Relative to the 2019 budget, Ontario’s revenues are expected to be $18.3 billion higher than anticipated for 2022/23 and $17.8 billion higher in 2023/24. The problem, however, is that the Ford government plans to spend all the additional $36.1 billion in revenue and then some.

If the Ford government was more disciplined with its spending, it could’ve used all of the additional money to eliminate the deficit in both 2022/23 and 2023/24. And run surpluses of $17.4 billion and $20.7 billion, respectively, had it maintained its original spending plans from 2019.

Instead, it continues to run deficits and accumulate debt that younger generations of Ontarians must repay in the future through higher taxes. Increasing spending by $57 billion from previous projections throws cold water on any suggestion from Premier Ford that his government is prudently managing provincial finances. The government has torn up its spending plans time and time again by consistently exceeding its own projections through a demonstrated failure to show restraint.

Premier Ford is correct that his government must be prudent in managing provincial finances and cannot afford to spend money “willy-nilly.” Unfortunately, the premier has yet to follow through on this approach. Let’s see if circumstances change this spring.