Ontario On Track For Budget Deficit This Year, Finance Minister Says

Ontario is sliding back into a budget deficit after a small surplus last year, said Finance Minister Peter Bethlenfalvy.

In its fall economic statement tabled at Queen’s Park on Monday, Bethlenfalvy said Premier Doug Ford’s Progressive Conservative government would be $12.9 billion short of revenue this fiscal year.

This follows a surprise surplus of $2.1 billion in 2021-22.

“While we expect a return to deficit for 2022-23, we know we can eliminate Ontario’s structural deficit with a responsible fiscal plan that is flexible enough to respond to uncertainty and risk,” said Bethlenfalvy.

Despite returning to red ink, Tories are extending a gas tax cut of 5.7 cents per liter for another year – until December 31, 2023 – at a cost to the Treasury of $1.2 billion dollars.

“We are in an era of rising inflation which is straining household budgets by driving up the price of everything from gas to groceries,” the finance minister said.

In addition, the government will double the Guaranteed Annual Income System payment for approximately 200,000 of Ontario’s poorest seniors. The maximum payment will increase to $166 per month for individuals from $83 from January. Elderly couples would be eligible for up to $332 per month.

“We know times are tough for many, but the most vulnerable are those who feel the impact of rising prices first,” the finance minister said.

“At a time of rising food costs, communities across the province are stepping up to support those in need, and so are we. »

Along with the previously announced 5% increase in Ontario Disability Support Program (ODSP) payments, Bethlenfalvy will increase the amount recipients can earn to $1,000 from the current $200.

This would not affect their benefits.

“Our government also recognizes that many ODSP recipients cannot work and need our continued support,” he said, noting that starting next year increases will be tied to the inflation rate.

According to Statistics Canada, inflation is currently at 6.9%.

While soaring tax revenues and post-pandemic growth briefly pushed Ontario into the black, Bethlenfalvy forecasts deficits for this fiscal year and next.

It comes as the Tories are in contract talks with education workers and come under increasing pressure to raise salaries for all civil servants.

After a shortfall of $12.9 billion in 2022-2023, it forecasts a deficit of $8.1 billion in 2023-2024.

But that is expected to fall to a $700 million deficit in 2024-25, suggesting the Conservatives should balance the books in time for the June 2026 provincial election.

The government has not provided any budget projections beyond this year.

Bethlenfalvy is far less optimistic than the Financial Accountability Office, an independent budget watchdog that three weeks ago predicted a $100 million surplus in 2022-23 and balanced budgets through 2027-28, while there should be a surplus of $8.5 billion.

However, the Minister of Finance has acknowledged that under a “faster growth” scenario, Ontario could experience a deficit of $10.4 billion in 2022-23, a shortfall of $900 million in 2023- 2024 and a surplus of $9.2 billion in 2024-2025.

“Faced with the prospect of tough economic times ahead, we must be prepared for anything,” Bethlenfalvy said.

In an apparent about-face for a Tory government which, when it took office four years ago, canceled 758 wind and solar energy contracts, Queen’s Park now wants to create a ‘clean energy credit registry “.

The voluntary registry would “give businesses more choice in how they pursue their environmental and sustainability goals” and could potentially generate revenue to promote green energy.

“A registry…would provide companies with a tool to…demonstrate that their electricity comes from clean resources, such as hydro, solar, wind, bioenergy and nuclear energy,” the government said.

The Conservatives are also closing a legislative loophole that would have allowed MPP salaries to rise when Ontario goes into the next surplus.

MPs, whose salaries have been frozen since Liberal Premier Dalton McGuinty imposed a freeze in 2009, earn a base salary of $116,550. The Premier wins $208,974 while the Ministers win $165,851 and the Leader of the Official Opposition wins $180,886.

Bethlenfalvy was forced to change the law after the unexpected $2.1 billion surplus in 2021-22 would have automatically triggered an increase in MPs’ base pay to $142,125 – a politically problematic increase of $25,575.

Instead, their salary will remain the same “indefinitely”.

Robert Benzie is the bureau chief at Star’s Queen’s Park and a reporter covering Ontario politics. Follow him on Twitter: @robertbenzie

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