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Ontario’s finance minister is strongly signalling that deficit spending will continue under his watch as the province’s economy continues to adjust to the prolonged trade war with the United States.
At the same time, Peter Bethlenfalvy is warning taxpayers that service cuts could be on the horizon if Ottawa scales back financial transfers in the upcoming federal budget.
The finance minister’s comments come in the wake of new findings from Ontario’s Financial Accountability Office that the province will have to spend billions of dollars more just to keep up with current service levels, and projections that the Ford government will have to run more than $35 billion in deficits between 2027 and 2035.
As he updated Ontario’s finances, Bethlenfalvy touched on the government’s ongoing deficit spending.
“While deficits are not desirable in the long run, they reflect the world we are in,” Bethlenfalvy said. “The world has changed, global economic conditions are becoming increasingly challenging while the relationship with our closest ally, the United States, has changed.”
While Bethlenfalvy suggested the Ford government would use the economic trade war to build the province’s “economic resilience,” it also acknowledged the growing reality that the government may not be able to find its long-promised path to balance.
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The government’s political critics call the situation “highly problematic,” and a sign that the government’s priorities aren’t reflective of what Ontario residents need.
“It’s an important issue because every time we don’t balance our budget, it means interest payments go up,” said Green Party Leader Mike Schreiner.
“The amount of money Ontarians are spending just on interest alone is unsustainable, and it’s crowding out funding that should be going to better healthcare, better education, building affordable homes, getting our communities ready for the increasing severity and frequency of climate change.”
Bethlenfalvy also warned that several federal transfers, including mental health, home care, labour and housing, are “coming to an end or being reduced,” putting additional strain on the province’s finances.
“Now is not the time for the federal government to gut these transfers, for if they do, reductions in services would be the inevitable result,” Bethlenfalvy said.
Critics argued that the government is overreliant on federal funding to fill the gaps in the Ontario budget and called on the province to take responsibility for its own affairs.
“If the government’s mismanagement of finances, which is making life less affordable and harder for the people of Ontario, is they continually either blame municipalities for it or blame the federal government instead of actually looking in the mirror,” Schreiner said.
Schreiner added that the government’s “election gimmicks,” including billions in tax cuts have created a steep drop in revenue that’s only adding to the pressure.
“The $200 checks that nobody asked for, the cuts to the license sticker fees that nobody asks for. All of those tax reductions disproportionately benefited the wealthy and it’s everyday Ontarians who are paying the price for it.”
The Ford government is expected to table its mini budget in November.
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