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Ontario deficit sits at $7.4-billion, half of what Premier Doug Ford originally claimed

Theglobeandmail.com
Sept. 16, 2019
Allison Jones

Ontario’s budget deficit now stands at $7.4-billion, nearly half of the $15-billion Premier Doug Ford claimed he inherited last year from the previous Liberal government -- a figure critics have said was vastly inflated.

Treasury Board President Peter Bethlenfalvy and Finance Minister Rod Phillips gave a financial update Friday with the government’s public accounts, saying the 2018-19 deficit improved over the $11.7-billion projection in the spring budget due to higher-than-expected tax revenues and lower spending.

In their last budget before the election last year, the Liberals projected a $6.7-billion deficit, but when the Progressive Conservatives came to power they said the province was $15-billion in the red. About $5-billion of that was the result of adopting different accounting methods.

The financial accountability officer at the time pegged the deficit as closer to $12-billion.

The opposition parties accused the government of making the deficit appear larger than it really was.

“The premier has overstated the deficit over the last year in order to pursue an ideological agenda of government cuts,” Green party Leader Mike Schreiner said in a statement.

Treasury Board President Peter Bethlenfalvy said the government has worked hard to lower the deficit.

“We stand behind those numbers,” he said. “I think it’s fair to remind the people of Ontario that we inherited a broken fiscal situation.”

Interim Liberal Leader John Fraser accused the government of underestimating the year’s revenue in previous financial updates, so that it could now say higher-than-expected revenue has helped lower the deficit.

The Tories said in their spring budget that the deficit was lowered to $11.7-billion, largely due to increased revenues.

Higher tax revenues and a decision to not draw on a reserve are part of the reason for the drop to $7.4 billion, along with $2.4 billion less spending than projected, including in education, children’s and social services and justice, as well as cancelling green programs that had been funded by the previous government’s cap-and-trade program, according to Friday’s update.

Bethlenfalvy has also touted saving “pennies, nickels and dollars” through such measures as saving on printing costs. Two weeks ago he spoke of such savings while standing in front of a “Protecting what matters most” backdrop that cost the government $2,641 to produce.

Bethlenfalvy also left the door open Friday to at least partly reversing one of the accounting changes that boosted the deficit. Doing so could improve the deficit by up to $1.3 billion.

The deficit is still projected to be $10.3 billion in 2019-20 and the government does not expect to balance the budget until after the next provincial election.

Mitchell Davidson, who recently left the premier’s office as the executive director of policy, said in an analysis that the government will have an increasingly difficult time making progress on the deficit.

A lot of what has been done already amounts to one-time savings or revenue boosts, he wrote in a blog post for StrategyCorp, where he is now the executive director.

“If the new minister of finance wants to be able to say the government has reduced the deficit next year, more work needs to be done,” Davidson wrote.

Friday’s public accounts financial update also says household disposable income increased by 5.4 per cent.

The government says that’s due to a number of factors, including the previous Liberal government’s minimum wage increase. It is also due to the cancellation of the cap-and-trade program, which removed associated costs from people’s home heating bills and the price to gas up their car -- but the cancellation also triggered the federal carbon tax, which came into effect this year, and brought those costs back.