Ford government breaks ‘balanced budget’ promise
On Thursday, the Ford government published the final budget of its first term in office and the last chance to make good on repeated promises made in Opposition (and on the campaign trail) to balance the budget and repair Ontario’s finances. To put it bluntly, this government has utterly failed to keep this central commitment of its election campaign.
The new budget is splashed with red ink. Let’s look at a few of the particulars. In the 2022/23 fiscal year, the government forecasts (excluding time-limited COVID spending) a budget deficit of $13 billion. By comparison, in nominal terms, the government faced a deficit of $7.4 billion when it took office in 2018/19. Clearly, it’s made no progress in reducing the deficit it inherited.
The outlook for the future is only slightly better, as the budget forecasts only gradual deficit reduction in the years ahead. The government’s fiscal plan predicts a $12.3 billion budget deficit next year and a $7.6 billion deficit the year after that—still nowhere near balance.
The government does provide a less-detailed longer-term plan to finally approach a balanced budget in 2027/28. But this type of forecast should be taken with a large grain of salt. Much can happen over the course of so many years. Negative economic events can occur and, perhaps more importantly, it’s always easier to promise fiscal restraint several years down the road than actually deliver on it. It should be cold comfort that the government is promising balance in the second half of this decade while it’s kicking the fiscal can down the road.
In fact, the Ford government’s medium-term guesstimate of a return to balance several years from now is reminiscent of a Wynne-era budget that committed to reduce Ontario’s debt burden over time, with almost all the progress slated to start several years down the road and only limited details on what would happen—at this later date—to finally cause the government to find religion on fiscal discipline.
At that time, we published an analysis of that plan titled “Wishful Thinking”—we were proven right that time, and there’s every reason to believe the Ford government’s long-term projections suffer from the same shortcomings and risks as those of the Wynne government.
And even if the government manages to hit its distant fiscal targets, it will still have betrayed its own commitments on the campaign trail and while in office. Consider that in 2019 the Ford government passed the Fiscal Sustainability, Transparency, and Accountability Act, which requires provincial governments to only run deficits under “extraordinary circumstances” and to identify those circumstances. In this case, despite reasonably strong revenue projections going forward, the government cites the pandemic as the extraordinary circumstance on page six of its budget. This defies the spirit of the law.
Barring a severe resurgence of COVID, the notion that the pandemic will still constitute extraordinary circumstances requiring deficits in the mid-2020s holds little or no water, particularly given reasonably strong revenue projections in the years ahead.
On the campaign trail, the Ford government promised to begin repairing Ontario’s finances. Today’s budget proves that, at least in its first term in office, the Ford government failed to keep this commitment.
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