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Ontario’s pre-election budget bets on big infrastructure spending — while running deficits

Ontario’s Progressive Conservatives released their pre-election budget on Thursday, pitching big spending on infrastructure and promising tax breaks for some workers and seniors — while running deficits for the next several years.

Many of the major commitments in the 268-page document were previously announced by Premier Doug Ford’s government ahead of the looming election campaign, set to begin on May 4. There is not enough time to pass the budget before the Legislature dissolves next week, so the document serves as a costed platform for the PCs.

The core themes of the $198.6-billion fiscal plan include improving and expanding critical infrastructure, rebuilding the economy in the wake of COVID-19, helping families with the rising cost of living and ensuring the province is prepared for any further waves of the pandemic.

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You can read the full budget document at the bottom of this story.

The budget was tabled at Queen’s Park by Finance Minister Peter Bethlenfalvy, who called it “Premier Ford’s vision for Ontario.”

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“We have to rebuild this economy. We have to grow those jobs,” he told reporters.

Asked if the PCs would table an identical budget if they are re-elected on June 2 , Bethlenfalvy did not explicitly commit to doing so, but said that it is the party’s campaign platform and it is up to voters whether they accept it.

“We are going to go through the election, we are going to listen to the people of Ontario,” he said.

Peter bethlenfalvy ontario budget 2022 top news
Finance Minister Peter Bethlenfalvy speaks to the media before tabling the Ontario budget, at Queen’s Park, in Toronto, on Apr. 28, 2022. (Evan Mitsui/CBC)

Deficit projected to increase this year

The budget includes significantly revised deficit projections, with the government forecasting a potential path back to balance by 2027/2028, two years earlier than estimated in 2021’s budget.

The Ministry of Finance said the province ran a deficit of $13.5 billion for the fiscal year that just ended, more than $19 billion below the 2021 outlook. While the pandemic injected considerable uncertainty into the province’s fiscal outlook, Ford’s government has consistently overestimated annual deficits throughout its tenure at Queen’s Park.

The government projects the deficit will balloon to $19.9 billion for 2022/2023 before falling to $12.3 billion in 2023/2024 and $7.6 billion by 2025. Those forecasts are based on a “medium growth scenario,” with actual outcomes dependent on Ontario’s economic condition in coming years.

The PCs say they would plan to spend about nine per cent more this year than during the height of the COVID-19 pandemic, and also run a higher deficit. Spending in key sectors would increase, on average, about five per cent annually for the next three years. 

Ontario’s financial watchdog said earlier this month that the province could have potentially reached fiscal balance by 2023/2024, with surpluses by 2025, but the PC government has opted instead for spending increases in some key areas.

While the PCs were elected on a promise to reign in government spending, Bethlenfalvy said that the pandemic “has exposed some of the lack of investment” by previous governments.

“I believe that we’ve found the right balance, to invest in Ontario, to build things, get good jobs, support workers and rebuild this economy in the context of a fiscally responsible plan,” he said.

$158.8 billion capital spending plan

The centrepiece of that promised spending is $158.8 billion for core infrastructure projects that will be spent over the next decade, with an aim to spend $20 billion of that total this year and next.

The breakdown includes:

  • $25.1 billion for highways, including the controversial Highway 413, the Bradford Bypass, a new twin bridge over the Welland Canal and early work to widen Highway 401 starting in Pickering and moving eastward through Eastern Ontario. The budget did not include any specific costs for individual projects. 
  • $61.1 billion for public transit projects, including major subway builds in Toronto and expanded service on the GO Transit network.
  • $40 billion for hospitals and health-care facilities, including $27 billion in capital grants. Ford and his ministers have made a slew of hospital-related funding announcements in recent weeks, including multiple projects in Toronto, Ottawa, Windsor, Brampton and Muskoka.
  • $21 billion for schools, with $14 billion going to capital grants. Education Minister Stephen Lecce said this month that $500 million would be put toward 37 school projects in 2022/2023. Ontario’s school repair backlog was estimated in September to be roughly $16.8 billion.

The government billed its proposed spending as “one of the most ambitious capital plans in the province’s history.”

For comparison, in their 2018 pre-election budget, the Ontario Liberals promised a $182 billion, 10-year capital plan, including $79 billion for transit and $16 billion for schools.

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The Progressive Conservative’s capital spending strategy includes a plan to widen Highway 401, starting in Pickering and going eastward. (Patrick Morrell/CBC)

Targeted tax cuts for seniors, low-income workers

With affordability and the rising cost of living expected to be defining issues on the campaign trail, the PC’s budget includes several measures targeted specifically at voters’ pocketbooks. 

While most of the proposed relief has already been announced, including scrapping license renewal fees and cutting the provincial gas tax by 5.3 cents per litre for six months starting on July 1, there are two notable proposed tax breaks.

First is a promised enhancement of the low-income individuals and families (LIFT) tax credit so that more workers become eligible to receive at least a partial rebate on their income tax.

The current tax credit is only available to individuals earning up to $38,500 or families with incomes up to $68,500 annually, up to a maximum of $850 per earner.

The enhanced credit would expand eligibility to individuals making up to $50,000, or families with a combined income of $82,500, and offer a rebate up to $875. The rate at which the rebate is phased out after certain income threshold would be reduced as well, from 10 per cent to 5 per cent.

The proposed changes would mean 700,000 more workers could benefit from the non-refundable tax credit, the government said, bringing the total to roughly 1.7 million Ontarians. 

Ministry of Finance officials said the current program costs about $400 million per year, with the enhancement adding an additional $320 million to that.

A second commitment in the budget is the Ontario Seniors Care at Home tax credit, which the government says would help with medical costs for some residents aged 70 and older for things such as walkers, hearing aids, home oxygen and attendant care.

The refundable credit would cover up to 25 per cent of medical expenses for eligible seniors, up to a maximum of $1,500 annually. Seniors with incomes of $35,000 and below could claim the full credit, with the amount gradually reduced for those with incomes above that threshold.

The PCs said it would provide an estimated $110 million in support to about 200,000 low and moderate-income seniors at an average of roughly $550 per family each year.

One measure notably absent from this pre-election budget: a 2018 promise from Ford for a 20 per cent middle class income tax cut. At the time, the PCs said it would be in place by the third year of their mandate. 

Short on climate change commitments

Meanwhile, the pre-election budget also totes the government’s investments to revise Ontario’s manufacturing capacity, including its Critical Minerals Strategy released in March and efforts to increase the production of electric vehicles in the province. 

In his speech, Bethlenfalvy said that the province’s plan for producing electric vehicles is partly about achieving climate targets “without imposing a carbon tax.” 

The budget document itself only mentions the term “climate change” once.

Earlier this month the province quietly revised its strategy to meet Ontario’s 2030 targets for cutting carbon emissions. The new path does not include any reductions from greater uptake of electric vehicles, which accounted for nearly 15 per cent of the projected cuts to emissions in the government’s 2018 “Made in Ontario Plan for the Environment.”

Rushing river provincial park top news
The government’s pre-election budget includes a promise for a new provincial park, though it provided no specific details about the plan. (Trevor Brine/CBC)

The government is, however, promising the creation of a new provincial park, though the budget document provided no details on where it will be located nor how much it will cost. 

Thursday’s budget was initially supposed to be tabled by March 31 but the government controversially amended its own law to delay its release. Officials said it was because they needed time to fully understand the fiscal consequences of pandemic-related spending.

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