Canada

Premier Doug Ford increased spending by record levels but Ontario deficit lower due to federal infusion of pandemic funds

The Ontario government increased annual spending by record levels due to the COVID-19 pandemic, but last year’s budget deficit was much lower than expected.

According to the province’s public accounts released Friday, $19.1 billion was spent tackling a health crisis that has killed almost 9,700 Ontarians since March 2020.

Premier Doug Ford’s Progressive Conservative government spent a record $169 billion in 2020-21 on programs — a $16.7 billion increase from the previous year.

That’s the largest year-over-year hike in program spending in Ontario history.

But thanks mostly to a massive infusion of $7.7 billion in one-time federal transfer payments from Prime Minister Justin Trudeau’s Liberal government, revenues were $8.8 billion higher than projected.

A hike in tax revenues accounted for the rest of the provincial windfall.

Finance Minister Peter Bethlenfalvy and Treasury Board President Prabmeet Sarkaria said that means the deficit came in last fiscal year at $16.4 billion, far lower than the projected shortfall of $38.5 billion.

“In Ontario as in other jurisdictions, historic support from all levels of government to support people and businesses during the pandemic has led to higher-than-forecast government revenues, reducing the deficit for 2020-21,” said Bethlenfalvy.

But Sarkaria sounded a note of caution on 2021-22 spending, which may be considerably higher due to the more infectious Delta variant of COVID-19.

“As we continue to battle the pandemic, we will leverage the full fiscal firepower of the province to support the people and businesses of Ontario,” the treasury board president warned.

Indeed, financial results released Friday do not include the spending that came to address the third wave of COVID-19 after April. Those figures will be released in the fall economic statement in November.

Education expenses were $300 million higher than forecast due to pandemic measures to protect students and teachers.

Similarly, an additional $300 million was spent on correctional and court facilities because of COVID-19 protocols.

But the province spent a staggering $3.5 billion less than forecast on health care because of fewer visits to physicians and fewer non-emergency procedures.

As well, Queen’s Park spent $900 million less than anticipated on post-secondary education due to students receiving federal benefits and lower college program expenses.

And $400 million less than projected was spent on children’s and social services due to “a lower caseload in social assistance.”

Overall, Ontario’s net debt came in at $374 billion, the highest of any sub-national jurisdiction in the world.

Speaking to reporters Wednesday, Ford insisted he was breaking the bank to combat COVID-19.

“Make no mistake about it, we’re going to be spending every single penny of what we receive (from Ottawa in transfers),” said Ford, amid questions about where pandemic funds are going.

“It’s no secret that we spend billions and billions of dollars supporting the people of Ontario, supporting the business and supporting the health care system, we’re going to continue doing that,” he said.

“There won’t be a penny left on the table when it comes to the pandemic. I think I’ve shown the people of this province I have not spared a penny. I want to make sure that the money goes to the right areas allocated to the appropriate people.”

Robert Benzie is the Star’s Queen’s Park bureau chief and a reporter covering Ontario politics. Follow him on Twitter: @robertbenzie

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