Randall Denley: Ontario’s fiscal mess isn’t just bad — it’s getting worse

On the deficit, even the Ford government’s own numbers aren’t good. Ontario’s most recent budget projects a deficit of $13.8 billion in 2026-27, $6.1 billion the year after, then a slight surplus in 2028–29. Photo by Peter Power /Postmedia News

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A series of new reports leads to only one logical conclusion: Ontario’s government finances are in a mess and getting worse.

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The provincial government’s current deficit projections are almost certainly optimistic and so are its numbers for future spending in key ministries, according to analyses by Ontario’s Financial Accountability Office (FAO).

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On the deficit, even the Ford government’s own numbers aren’t good. Ontario’s most recent budget projects a deficit of $13.8 billion in 2026-27, $6.1 billion the year after, then a slight surplus in 2028–29.

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It’s difficult to give those numbers much credibility. Finance Minister Years ago, Peter Bethlenfalvy said there would be a surplus in 2024–25, but he has now pushed that target back three times.

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The FAO has decidedly different view. Based on its assessment of the economy, current government policies and announced commitments, the accountability office does not foresee a return to balanced budgets even by 2030–31, the last year of its analysis.

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If so, those deficits will have a big effect on Ontario’s finances. By 2030–31, the accumulated deficit would increase by 25.3 per cent to $309.6 billion. Net debt, which combines the deficits and borrowing for infrastructure, would jump by $169.1 billion, or 39.6 per cent.

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Ontario’s past deficits were incurred despite healthy revenue growth. When Premier Doug Ford took power in 2018, government revenue was $153.7 billion. This year, it’s expected to be $232 billion. And yet, his government still finds ways to spend more than it takes in.

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The COVID-19 pandemic did push up government spending, but years later it has never come back down.

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The lack of fiscal discipline has real consequences. Debt interest will cost taxpayers $17.2 billion this year and the FAO projects it to rise to $24 billion by 2030–31.

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Those are big numbers, but the bottom line is simple. The provincial government has less to spend on important services because it’s paying so much in interest.

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That was readily apparent in reports the FAO released Wednesday. The accountability office looked at expected future spending on health care, education, colleges and universities, and social services. In almost every item examined, it found that the future spending identified in the budget would fail to maintain service levels, much less improve them.

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That’s particularly dismal news because per capita spending on many Ontario services is less than the national average. The basics are in bad shape.

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On health care, the government projects that spending will grow at an average annual rate of 3.2 per cent between now and 2028–29. The FAO estimates that 4.4 per cent annual increases would be necessary to maintain service levels.

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The government’s lower planned spending level would mean fewer hospital beds and fewer nurses, although the number of physicians and personal support workers would go up.