Peter Bethlenfalvy, Ontario's Finance Minister, speaks with the media in Toronto on Feb. 3. Bethlenfalvy said the budget he will deliver on Thursday will be a 'staying-the-course' document.Nathan Denette/The Canadian Press
Ontario’s Finance Minister says his budget this week will be a prudent response to global uncertainty as the economy slows amid higher interest rates, even as his critics urge him to spend the billions of dollars the government has kept in contingency funds on the ailing health system.
In an interview with The Globe and Mail, Peter Bethlenfalvy said the budget he will deliver on Thursday will be a “staying-the-course” document, keeping ample cash in reserve in case the economy worsens while still putting more money into health care.
“We have a world where we’ve got a lot of geopolitical instability with Russia and Ukraine, and inflation and interest rates we haven’t seen in a long time. We still have supply chain challenges. … We’re in uncertain times,” he said in the interview. “That’s why we build in prudence and contingencies and reserves to be able to deal with those uncertainties.”
While declining to provide specifics, Mr. Bethlenfalvy said the budget will focus on funding for health care, including home and community care, mental-health and long-term care, as well as getting more housing built, moving forward on new highways and public transit and training workers – but with “responsible, targeted approaches.”
Opposition politicians say Premier Doug Ford’s Progressive Conservative government has been wrong to keep billions – $12.5-billion over three years, according to the province’s independent Financial Accountability Officer – sitting unspent in contingency funds, while hospitals buckle with staff shortages. They point to the FAO’s projections that funding for health and education over the next several years will fall far short of the amounts needed to maintain even just current standards.
Mr. Bethlenfalvy defended his contingency funds but said the FAO relies on previous budgets and economic statements to make its predictions.
“I say watch my budget. We’ve invested unprecedented and historic amounts of money in health care,” he said.
Opposition NDP finance critic Catherine Fife said the government needs to spend more on health care, citing the FAO reports. But she also said the government should spend more strategically, such as by making better use of existing operating rooms in hospitals instead of farming out more surgeries to new private clinics.
To alleviate nursing shortages, she urged the government to drop its legal battle to retain Bill 124, its legislation that temporarily capped wages for nurses and all public-sector workers to 1 per cent a year that was recently struck down in court.
Ms. Fife also accused the government of using exaggerated deficit projections, which have in recent years ended up evaporating because of higher-than-predicted tax revenue, as cover to justify shortchanging social programs. Last month, Mr. Bethlenfalvy acknowledged his 2022-23 deficit was expected to come in at $6.5-billion, or about half as much as predicted just three months earlier.
“They view the deficit as a shell game that they can manipulate to underspend and underinvest in core areas,” Ms. Fife said.
Liberal MPP Stephanie Bowman, a former bank executive who is mulling a bid for her party’s leadership, also called for an end to Bill 124 and questioned the government’s large contingency funds, which she said it justifies by saying it is “squirrelling money away from a rainy day.”
“In fact, the rainy day is here,” Ms. Bowman said. “The crisis is here now in our health care system.”
Karl Baldauf, vice-president of McMillan Vantage Policy Group and former chief of staff to Mr. Bethlenfalvy, said he doesn’t expect the budget to contain a lot of flashy new promises, given that the next election is not until 2026.
“We’ve got some headwinds coming our way, and people just want government to work,” Mr. Baldauf said. “I think you’re too early in the political cycle to need to be able to have those shiny things.”
Marc Desormeaux, principal economist for Canadian economics with Desjardins Group, said Ontario’s budget will be released as the province faces stronger economic headwinds than the rest of Canada. He said Ontario’s household consumption sank 4 per cent on an annualized basis in the third quarter of 2022, while remaining flat elsewhere in Canada. Plus, housing prices have fallen more steeply here than in other provinces, he said.
On the other hand, the government’s till is overflowing with more tax revenue than predicted: Last month, the government said it had raked in $9.6-billion more than budgeted in its third quarter, which ended Dec. 31.
“I think the government’s going to be trying to navigate good news and bad news,” Mr. Desormeaux said of the budget. “The good news is that the province’s revenues have come in at a stronger trajectory than forecast . … The bad news is that we are starting to see signs of some weakness in the Ontario economy and the economic and financial backdrop is less certain now than it was three or six months ago.”
Rose Zacharias, president of the Ontario Medical Association, said her organization, which represents the province’s doctors, is calling for $320-million in new spending next year to attract more doctors and improve wait times and palliative care.
She said the province should also accelerate efforts to create a centralized intake and referral system for elective hip, knee and cataract surgeries, instead of relying on what she said was a now word-of-mouth system.
“It’s a waste of time, it’s frustrating and it’s so behind the times. We should have a way for this to be much better organized on behalf of our patients,” she said.
The Ontario Chamber of Commerce, which warned last month that business confidence in the province was at a record low, has not urged the government to slash taxes or target its debt load. Instead, the business lobby group has been urging the province to make what it calls “growth-enabling investments” in the health care system and in programs to address labour shortages.
“It all comes down to the types of things that will get businesses working and investing. And at this moment, those things include infrastructure and health care resilience,” said Claudia Dessanti, the OCC’s senior manager of policy.