To say Doug Ford spends like Kathleen Wynne is unfair to the former Liberal premier. Mr. Ford, notionally a Progressive Conservative premier, lambasted Ms. Wynne as an out-of-control spender in the 2018 election campaign. But since then, he has outstripped his Liberal predecessor.
In its budget released last week, the Ford government claimed that the deeper deficit this year, and disappearing surplus next year, resulted from revenues softening as high interest rates bite into economic growth. Taken from the narrow perspective of last fall’s fiscal update, that is true: revenue growth is not as strong as previously forecast, although still forecast to increase each year.
But take a step back to look at the 2022 budget – which the PCs campaigned on in that year’s election as a blueprint for their second term – and the picture is much different. The province now projects that its revenue for fiscal 2024-25 will be $8.8-billion higher than was originally forecast in 2022; debt costs are forecast to be $1-billion lower.
Add it all up, and Ontario could be headed for a $2.2-billion surplus this year. Instead, the Ford government is forecasting an $8.8-billion deficit (which doesn’t count $1-billion set aside as a reserve fund). The difference, of course, is that the PCs spent those extra billions of dollars, and then continued on spending.
In fact, Mr. Ford is set to become the biggest spender in modern Ontario history, based on the percentage of provincial gross domestic product taken up by program spending. As the accompanying chart shows, the Ontario government forecasts that program spending will equal 17.89 per cent of GDP, edging ahead of the 17.87 per cent figure for the McGuinty government in 2010.
Mr. Ford’s spending will outdistance not only that of two Liberal premiers, but the PC governments of 1995 to 2003 – and even the NDP government of the early 1990s.
Provincial spending is forecast to grow more slowly than the economy in the next two fiscal years, according to the forecasts in the budget. But Mr. Ford’s government – much like the Trudeau Liberals in Ottawa – has developed a habit of revising its spending upward with each successive budget. Projected surpluses beckon in the future, but don’t materialize in the present.
That fiscal drift reflects the broader governing fuzziness of the Ford government, which seems intent on pouring billions of extra dollars into the unsustainable status quo and frittering away resources on populist baubles.
A case in point is the cut to fuel taxes, which will cost Ontario $945-million in the current fiscal year. Similar subsidies to electricity bills will cost $7.3-billion. Of course, the Ford government says those subsidies to energy consumption are meant to reduce the cost of living.
But that $8.2-billion could deliver a big cut to personal income taxes in the province, by nearly a sixth. Or the government could cut business income taxes by a third. It’s telling that the 2018 PC promise of tax cuts for individuals and businesses didn’t even rate a mention in this year’s budget.
What could the Ford government do differently? Focusing on income tax cuts, which would help to rejuvenate the Ontario economy, would be a good starting point. Scouring the provincial budget for business subsidies, rather than helping to underwrite the federal Liberals’ lavish underwriting of electric battery plants, would quickly pare down the deficit. And using new health care expenditures to buy change, such as a ramp up in at-home care for aging baby boomers, would be another obvious step for a fiscally conservative government.
Unfortunately for Ontario, the Progressive Conservatives are not that government.