Loading articles...

More cuts will be needed to balance provincial budget: FAO

Last Updated May 22, 2019 at 5:50 pm EDT

If the Ford government wants to hit is spending targets then be prepared for more cuts.

That’s the verdict from the independent Financial Accountability Office which says $900-million has already been trimmed from the provincial deficit over last year. But if the province plans to balance the budget by 2022-23, it will need to find another $6-billion in spending cuts.

“Given the outlook for modest revenue gains, the government’s plan for balancing the budget relies on restraining the growth in program spending to historic lows,” the FAO’s Peter Weltman says in its executive summary.

The FAO said the government’s plans will see it hold program spending growth to one per cent on average over the next five years – meaning spending on public services would be reduced by $1,100 per person during that time.

Such a level of restraint hasn’t been seen since the mid-1990s, when former Tory premier Mike Harris was in office, the FAO said.

At that time, from 1992-93 to 1998-99, spending growth was constricted to 0.3 per cent. Harris’s years in office were marked by an agenda of cuts, service reforms and municipal amalgamations in order to reduce the province’s deficit and lower taxes.

Spending growth was at its highest during Bob Rae’s NDP government from 1989-90 to 1992-93 – at 10.2 per cent – as that government grappled with a deep recession.

The previous Liberal government held spending growth to 1.4 per cent in the period after the last recession from 2010-11 to 2016-17. But spending growth jumped to 6.8 per cent during the final two years of former Liberal premier Kathleen Wynne’s term in 2016-17 to 2018-19.

The FAO is also warning of slower economic growth, saying revenues are projected to increase just 3.2 per cent per year which is down from the previous gains of 4.2 per cent over the last five years.

It also says factors like increasing interest rates, high household debt and trade uncertainty could negatively impact the government’s plans.

“If Ontario’s economic performance is worse than expected, or if the government is unable to meet its spending targets, it is unlikely the government would be able to meet its commitment of balancing the budget and also implement the new provisional measures assumed in the budget plan,” concludes the FAO.

Finance Minister Vic Fedeli said the FAO’s report shows the government’s plan to address the deficit is working.

“(The FAO) confirmed that our government’s measured, thoughtful and responsible path to balance is credible and the plan laid out in Budget 2019 will put the province on a sustainable footing,” he said in a statement.

But NDP finance critic Sandy Shaw said the watchdog’s report shows that the restrained provincial spending will hurt Ontario residents.

“It’s clear that Doug Ford’s deep cuts are already costing us,” she said. “We’ve seen this already and clearly with this report things are only going to get worse for Ontario.”

Green party Leader Mike Schreiner said the report shows the Ford government needs to re-evaluate its spending priorities and should not be planning to hand out a pre-election tax cut at the same time that it constrains program spending.

While the Ford government has touted that it has found 8 per cent in savings, the FAO’s Peter Weltman says as of today they’ve only been able to identify half that number.

Files from The Canadian Press were used in this report

Latest Traffic & Weather
680 NEWS TRAFFIC @680NEWStraffic 680 News Traffic Twitter verified icon
Updated Yesterday at 10:28 PM
#EB401 ramp to Stevenson now reopened
Latest Traffic
680 NEWS WEATHER @680NEWSweather 
Updated Yesterday at 05:45 PM
We will certainly see rain for tomorrow and it is likely that we'll get into some thunderstorms by Friday evening.
Latest Weather