The Top Line
Earlier today, Ontario Finance Minister Rod Phillips, tabled the 2019 Economic Outlook and Fiscal Review. This is the Minister’s first formal economic update since assuming the office in June of this year. Seen as a mini-budget, it is generally believed to set the stage for the next provincial budget, expected in March 2020.
The Minister pledged to fix broken systems and manage the largest subnational debt in the world.
The government is forecasting Ontario’s real GDP to grow by 1.4 per cent in 2019, 1.5 per cent in 2020, 1.5 per cent in 2021 and 1.9 per cent in 2022.
As was well telegraphed, the government projected a deficit of $9 billion, which is $1.3 billion less that its earlier projection of $10.3 billion. Future deficits are projected as $6.7 billion in 2020–21 and $5.4 billion in 2021–22.
The Minister emphasized that fiscal policy-making will continue to follow the three themes announced earlier this year:
- To put more money in people’s pockets;
- To invest in critical public services; and,
- To put Ontario’s finances on a sound footing.
Minister Phillips used the Fiscal Update to announce the government will go beyond the 2019 budget to invest an additional $1.3 billion in critical services, $400 million in health care and $200 million more in education. This represents a total spending increase of $1.9 billion in health care and $1.2 billion in education in the course of the fiscal year.
Premier’s Advisory Council on Competitiveness
The Minister announced the creation of the Premier’s Advisory Council on Competitiveness. The Council will work with business leaders and workers across the province to find ways to improve competitiveness. The Minister claims that so far, the government’s actions, including accelerated write-offs of capital investments, canceling the cap and trade carbon tax and reducing WSIB premiums, are saving Ontario businesses $5.4 billion next year alone.
The new Council will be supported by the Ministry of Finance and the Ministry of Economic Development, Job Creation and Trade.
Small Business Taxes
The government is reducing the small business corporate tax rate from 3.5% to 3.2%. This will save 275,000 small businesses across Ontario up to $1,500 a year. Combined with other measures, the Ford government is expected to deliver $255 million in Ontario income tax relief for small businesses in 2020.
Of note, is the reappearance of a Commitment to consulting with First Nations and working with industry, public health stakeholders, and retail associations, to determine how unregulated tobacco can be addressed. This had been omitted in Budget 2019
The government will continue to move forward with a $28.5 billion transit expansion plan for the GTA which includes: the Yonge North subway extension, the Eglinton Crosstown West Extension, the improved three-stop Scarborough Subway Extension, and the all-new Ontario Line.
The provincially owned GO Transit rail network is increasing service by eight per cent this year, adding and extending over 140 trips a week and is on track towards all-day, two-way GO service every 15 minutes in core segments of the network. By 2020, GO customers will start seeing free Wi-Fi rolled out across the entire fleet.
The Minister emphasized that the government is investing an additional $1.9 billion in health care this year, including $68 million in small- and medium-sized hospitals.
The government plans an unprecedented investment of $3.8 billion in the mental health care system over the next decade, starting with $174 million this year.
Finally, the government is investing an additional $279 million in the Ontario Autism Program, for a total of $600 million annually.
The government is adopting a “digital first” approach to help save money and deliver services more conveniently. The government estimates a new centralized procurement system will eventually generate savings of $1 billion a year.
Task Force on Value
The government is establishing a new Value Creation Task Force to identify opportunities to generate new, recurring, non-tax revenue streams. This new revenue will be re-invested back into core public services, like health care and education.
Andrea Horwath claims all the numbers in the budget are made up and she doesn’t believe there is a $9 billion deficit.
She claims that government continues with tough cuts to programs and that this statement does nothing to change that.
Liberal leader John Fraser said: “While there’s an effort to change the tone, the song remains the same.”
What this Means for You
The 2019 Fall Economic Statement reiterates that the government is staying the course it set after the 2018 Election. It will continue to lower the deficit, with a goal of balancing the budget in 2023, with strategic spending increases focused on infrastructure, health and education. New announcements for consultation appear to show a government more willing to listen and achieve consensual policy-making than seen earlier this year.