TORONTO — The Ontario government has only found about half of the savings necessary to meet its own budget plan, the province’s financial watchdog says.
Another $6 billion will have to be cut from the province’s expenses by 2021/22 for Premier Doug Ford’s government to achieve its projections, the Financial Accountability Office (FAO) said in a report Wednesday.
“There are probably policy changes that they’re kicking around right now that they haven’t decided to announce yet, for a whole variety of reasons,” Financial Accountability Officer Peter Weltman told reporters.
“It’s normal budget planning. They probably want to see how things unfold for the next few years.”
Ford’s government has already made a slew of changes to save money, including a $1 billion cut to annual spending on social services, the merging of local health networks into one “super agency,” increasing class sizes for elementary and high school students and eliminating free tuition for low-income college and university students.
Government spending has to increase every year just to maintain existing services because of inflation and population growth.
Ontario’s Progressive Conservatives plan to limit growth in program spending to an average of one per cent per year.
That “would be the slowest pace of spending growth since the mid-1990s,” the FAO report says.
Spending on public services will drop by $1,100 per person per year, or more than 10 per cent, over the next five years if the government follows through with that cap.
All I can say is that the last time that was done was in the 1990s.Financial Accountability Officer Peter Weltman
Weltman wouldn’t comment on how this could affect services like health care, education and social services.
“All I can say is that the last time that was done was in the 1990s,” he said. “That’s a significant change.”
In the 1990s, former Progressive Conservative premier Mike Harris slashed social services and downloaded costs onto municipalities. One of the services that was cut was water testing for cities and towns, which an inquiry said led to the E. coli contamination in Walkerton, Ont. that killed seven people.
A spokesman for Minister of Finance Vic Fedeli told HuffPost Canada that the government will reduce debt while investing in areas like health care and education.
“Budget 2019 lays out the first steps of our plan, and we will continue to roll out our responsible path to balance over the months and years ahead,” spokesman Robert Gibson said by email.
“Our plan puts the people at the centre of everything we do – we will continue on our path to balance while continuing to make investments that protect frontline services.”
Opposition MPPs react
NDP finance critic Sandy Shaw said that restraining spending growth to one per cent would undoubtedly affect key services like health care and education.
“Those are the kind of cuts that are going to hurt people,” she said.
Weltman also noted that the government appears to be leaving itself breathing room so that it can make other changes to revenue.
During the election campaign, Ford’s PCs promised to cut income taxes by 20 per cent for people earning between $42,960 and $85,923.
Mike Schreiner, leader of the Ontario Green Party, said the government should forgo its promised tax cuts.
“Yes, getting the province’s books in order is absolutely critical,” he said. “And that is why an additional $3.6 billion in tax cuts are fiscally irresponsible and unsustainable.”
Schreiner said that the government should:
- cancel its planned income tax cuts;
- reverse its decision to cancel a surtax on some of the province’s highest earners;
- change the previous government’s Fair Hydro Plan, which adds to Ontario’s debt by lowering electricity prices with borrowed money, so that high earners pay the real price;
- and use Ontario’s natural resources to bring in more revenue.
He also noted that while the premier has claimed the federal government’s carbon tax could trigger a recession, the FAO economists say that Ford’s cuts to government spending will shrink Ontario’s real GDP growth by 0.2 per cent per year.
“It’s clear from the FAO analysis that any economic slowdown will be due to the austerity measures of the Ford government,” Schreiner said.
This story has been updated with comment from the Minister of Finance’s office.
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