The Ford government and the Financial Accountability Office (FAO) are once again greatly at odds with one another about the state of the province’s finances.
According to Finance Minister Peter Bethlenfalvy, Ontario’s finances are still in relatively decent shape.
Bethlenfalvy has consistently insisted that the province’s budget will get back to balance in 2027-28, just over one year from now.
After tabling Ontario’s fall economic statement late last fall, Bethlenfalvy was adamant that Ontario’s budget would finally get back into the black by 2027.
But a new FAO report says that in the very same year Bethlenfalvy recently projected a small surplus, Ontarians should instead expect a hefty $8.5-billion deficit.
In fact, the FAO analysed Ontario’s finances through 2029-30 and doesn’t expect to see a balanced budget even once during that timeframe.
Why is there such a misalignment between the Finance Ministry and the FAO?
Bethlenfalvy’s numbers project significantly higher revenues and significantly lower expenses than the FAO’s outlook.
And, between fiscal years 2024-25 and 2029-30, the FAO expects Ontario’s debt to increase by a whopping $120.9 billion, or 28.3 per cent.
The FAO report, if read in its entirety, is an indictment of the Ford government’s overall fiscal management.
The FAO notes that revenue over the past five years has grown at an average annual rate of 7.6 per cent. Yet, despite all that new cashflow, this year’s deficit is still expected to be north of $13 billion.
Why?
Because government spending over the past five years has grown at an average annual rate of 6.5 per cent, well above inflation plus population growth.
If the Ford government had kept spending down over the past number of years, the conversation today would be about how large the surplus would be in 2027, not whether the much-anticipated balanced budget will come to pass at all.
The Ford government came to office promising to end the party with taxpayers’ money. But if things go the way the FAO is projecting, and the FAO has been right much more often than the Finance Ministry has, Ontario’s debt will be nearly $550 billion before the next time Ontarians head to the polls.
What’s driving overall spending growth?
In the coming years, the FAO expects healthcare spending to be much higher than the government has currently forecast.
Bethlenfalvy is presently forecasting healthcare spending to grow at an average annual rate of one per cent. The FAO, on the other hand, expects to see 4.6 per cent growth.
Given the healthcare challenges the province is facing, and the Ford government’s primary care commitments, it’s hard to see the government holding healthcare spending growth down to just one per cent.
The bad news in the FAO report doesn’t stop there. The FAO expects real GDP growth to remain below two per cent per year all the way through 2030. And, continuing on a recent negative trend, Ontario’s economic growth is expected to lag that of the country at large.
Is it even possible for the government to achieve a balanced budget by 2027?
In order to wipe out a projected $8.5-billion deficit, Bethlenfalvy and Premier Doug Ford would have to significantly cut spending to get there and hope that economic growth comes in much stronger than forecast.
Given the current government’s long history of refusing to rein in spending and the global economic uncertainty due to U.S. President Donald Trump’s tariffs, that’s a tall order.
So, despite what the Ford government is telling taxpayers, don’t expect a balanced budget anytime soon.
For a party that came to power promising to straighten out the province’s finances, a sea of red ink after eight years in government sure doesn’t look pretty.
Jay Goldberg is the Canadian Affairs Manager at the Consumer Choice Center. He previously served as the Ontario Director at the Canadian Taxpayers Federation and a policy fellow at the Munk School of Public Policy and Global Affairs. Jay holds a Ph.D. in Political Science from the University of Toronto.
