Summary

• Ontario faces a large operating deficit. Further, recent analysis suggests the province’s finances are unsustainable—in other words, without policy changes, the provincial debt is expected to grow relative to the size of the economy.
• Ontario’s debt-to-GDP ratio is now the highest it has been in the history of the province. This is largely the result of two recessions and the policy choices made during those recessions, particularly in the early 1990s under Premier Bob Rae and in the early 2010s when Ontario’s debt increased quickly under Premiers McGuinty and Wynne.
• The COVID-19 recession has exacerbated Ontario’s fiscal challenges, causing provincial debt to increase even further.
• It remains to be seen whether Ontario’s current government will repeat the choices of its predecessors and allow debt to rise over the next several years, or whether it will move to eliminate the deficit quickly and prevent the type of sustained debt growth of the 1990s and 2010s.
• The government’s current fiscal plan does not present any strategy to return the province to a balanced budget, but it is not too late for the government to change course.
• Current program spending levels are higher than those the present government inherited from its predecessor. By bringing inflation-adjusted per-capita spending levels approximately in line with those that prevailed during Premier Wynne’s time in office, the Ford government could, given current revenue estimates, return to a balanced budget in the 2022/23 fiscal year.