Ontario’s Progressive Conservatives are heading down the fiscal path carved out by the federal Liberals, with a leisurely approach to unwinding the debt burden of the pandemic’s economic shock that sidesteps any serious austerity measures.
That line could have easily made an appearance in federal Finance Minister Chrystia Freeland’s budget speech, when she said: “So now is the time for us to focus — with smart investments and a clarity of purpose— on growing our economy.”The speeches by the two finance ministers lean heavily on touting investments, with Ms. Freeland using that word or a derivative 18 times, and Mr. Bethlenfalvy outpacing her with 33 mentions. Each of them refer to the budget deficit just once.
On taxation, too, there are parallels between the federal Liberals and Ontario’s Conservative government. There are no broad based reductions in personal income taxes. Ontario has a similar gap and a bit of a fiscal mystery. The Ford government is projecting a sudden slowdown in the growth of health-care spending, starting in the current fiscal year. The health care budget for fiscal 2022-23 is set to rise by 5.9 per cent, but the consumer price index is forecast to hit 4.7 per cent in 2022, meaning that the inflation-adjusted increase for health care is a scant 1.2 per cent, below the rate of increase in Ontario’s population.
Even with those extremely favourable assumptions on health care spending, the Ford government is projecting only a modest decline in Ontario’s debt burden through the middle of the decade, as measured against the size of the province’s economy. Net debt as a percentage of gross domestic product is actually forecast to rise in the current fiscal year, bumping up to 41.4 per cent in fiscal 2023 from 40.7 per cent in fiscal 2022.
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