Pity Canada’s poor finance ministers these days. It is not an easy job. Your boss is always keen to spend on new initiatives that might be politically popular. Your cabinet colleagues are happy to present you with a long list of financial asks, all urgently needed. Not to mention the seemingly endless demands from stakeholder and special interest groups.
Events around the world that are outside your control – from epidemics and financial crises to tariff wars and real wars – undermine your ability to forecast accurately and threaten our economic growth. And fearful voters look to you for protective measures.
What is a poor minister to do? Well, this spring, Canada’s finance ministers threw the dice or should that be, threw more money at it all, driving their jurisdictions, not to mention the country, deeper into debt.
Ontario was no exception, bringing in a deficit of $13.8 billion, $6 billion worse than projected in the province’s Fall Economic Statement last year. At least the government has a plan to get to balance, hoping to do so by 2028-29, a year later than originally projected.
But what is even more concerning is the cost of that increased debt. Because spending more than Ontario is currently capable of earning in revenue, means borrowing more. And while spending more on healthcare or education or subsidies to protect certain industries from tariffs are all defensible decisions, the bottom line is that our debt is growing and the price Ontario pays to service that debt is projected to grow faster than any other top-line item.
As Graeme Gordon wrote in the online publication, The Hub:
“If the average spending growth rates projected in the 2026 budget continue, Ontario taxpayers will be paying more on the interest payments on the debt than on all of social services combined by the start of the next decade.”
For example, the average growth rate of debt interest payments is predicted to grow by almost seven percent from the end of the last fiscal year until 2028-29. Yet healthcare’s average annual growth rate in spending is only four percent, social services is 1.5 percent and education is two percent.
For most taxpayers, the mind-blowing billion-dollar numbers can be hard to grasp. But just think of your credit card. When the interest you pay is more than what you are spending, you know you are headed for trouble. What happens if the car breaks down? You get laid off? The rate on your variable mortgage goes up?
Provincial finances are of course, not that simple. Ontario continues to maintain a strong credit rating, is well regarded in foreign debt markets and has more flexibility in its ability to borrow and what it pays to do so.
But at the end of the day, we are continuing to spend more than we are able to earn, as is the rest of the country. Cut spending, borrow more or figure out how to increase our collective revenue growth remain a finance minister’s levers.
Ontario’s Finance Minister, Peter Bethlenfalvy, understands this well having spent his career in the financial sector. He understands risk, acknowledging on budget day that he would have preferred a smaller deficit. But the challenges are fierce and the global future uncertain.
To help manage some of the province’s risks, his path to balance uses growth planning assumptions that are less generous than those predicted by private sector forecasters. He has also increased special contingency or “rainy day” funds to among the highest levels Ontario has ever set aside before, reflecting the uncertainty the province is facing.
The budget also lays out areas where “value for money” audits on things like infrastructure investments, electricity rate relief programs, OHIP and welfare fraud and business support programs might generate savings.
Critics say it is not enough. And they are right. Interest groups and other stakeholders call for more spending and it is badly needed. Levers to promote growth take time. Geopolitical risks grow.
Spare a kind thought for our finance ministers.
Janet Ecker is a former Ontario Finance Minister, Minister of Education, Minister of Community and Social Services and Government House Leader in the governments of Premier Mike Harris and Premier Ernie Eves. After her political career, she served as the founding CEO of the Toronto Financial Services Alliance, a public-private partnership dedicated to building Toronto region into an international financial centre. She currently sits on a number of corporate and non-profit boards, agencies and advisory committees.
Ms. Ecker received the Order of Canada for her public service contributions and was recognized as one of the “Most Influential People in the World’s Financial Centres” by Financial Centres International. She also received a “Canada’s Most Powerful Women: Top 100 Award” from the Women’s Executive Network and the Richard Ivey School of Business, among other awards. She is also one of the founders of Equal Voice, a national, multi-partisan organization working to elect more women.
