Ontario's 2022 Fall Economic Statement: A look at what's next for Premier Ford's government

Yesterday, Ontario’s Minister of Finance Peter Bethlenfalvy provided the Ford Government’s first major fiscal update since their convincing re-election win in June. Borrowing from the title of the 2022 Budget unveiled during the Premier’s previous term, the 2022 Ontario Economic Outlook and Fiscal Review - Ontario’s Plan to Build: A Progress Update, provides both a progress report on the government’s 2022 Budget commitments as well as proposed enhancements to those commitments. The document also provides an update on the province’s finances, including an economic outlook and a fiscal plan to guide the government’s four-year term.

The release of the 2022 Fall Economic Statement (FES) comes at a time when the Premier and his government have been covered in the media for all the wrong reasons. The province has repealed Bill 28 which just last week had put the government at odds with Ontario’s unionized education workers resulting in a strike. While a resolution may be on the horizon, the conflict has undoubtedly hurt the Premier’s approval ratings.

Further, with COVID-19 cases on the rise again, alongside influenza and respiratory syncytial virus (RSV) cases, and Ontario’s top doctor recommending the use of masks in indoor settings, it is likely that the government may be in for a challenging period of public scrutiny, or at the very least, heightened attention.

For the most part, while the 2022 FES may remain under the radar in the public realm, the current political landscape in Ontario should make for an absorbing six months in advance of the 2023 Budget, which is the likelier of the two fiscal updates to include any major new commitments.

“Together, we have come so far,” said Minister Bethlenfalvy. “From attracting investments and good jobs to training thousands of skilled trades workers and helping keep costs down for families, we have made significant progress. As we navigate these uncertain economic times, our government is enhancing its plan through new targeted measures that support families, seniors, and small businesses.”

By the numbers, Ontario is projecting a deficit of $12.9 billion for 2022-2023, nearly $7 billion lower than the outlook published in the 2022 Budget. Ontario’s 2022-2023 net debt-to-GDP ratio is now forecast to be 38.4 percent, 3.0 percentage points lower than the 41.4 percent projected in the 2022 Budget, while Ontario’s real GDP is projected to rise by 2.6 percent in 2022, and 0.5 percent in 2023. The province is also bracing for lower job creation in 2023 and 2024 as well as weaker housing sales in 2022 and 2023.

NATIONAL’s first take

Our initial analysis is as follows:

• Unsurprisingly, a large part of the 2022 FES touts the billions of dollars that the Ford Government has invested through the 2022 Budget in rebuilding Ontario’s economy, workforce, and infrastructure, in parallel with the various cost-cutting measures that helped put money back into the pockets of Ontarians. This is generally the theme of FES documents that aim to provide a 6-month update on expectations versus reality.
• While new commitments in the statement are limited, the Ford Government makes proposed “enhancements” to commitments made in the 2022 Budget, thus positioning themselves as being action-oriented rather than simply regurgitating their promises. Even then, a few of the proposed enhancements are simply broad statements such as continuing to cut red tape, albeit in several areas and sectors through the creation of consultation groups. It is also telling since it is unlikely that major investments, like the ones we saw in the 2022 Budget, will be brought forward in the 2023 Budget on the cusp of a looming recession.
• Of the few new commitments that do provide a clearer picture, there is a pronounced focus on small businesses as well as the province’s workforce, both of which will be critical at a time of economic uncertainty. For example, Ontario is expanding its parameters for the income tax relief program, providing 5,500 more small businesses with $185 million in income tax relief over the next three years. The government has also committed to automatically matching property tax reductions for small businesses within all municipalities that adopt the small business property subclass.
• With slowing job growth expected in the next few years, the province has also committed to investing an additional $40 million towards the Skills Development Fund, and an additional $4.8 million towards the Dual Credit program for students entering the skilled trades or in early childhood education. While nominal in comparison to some of the government’s major funding commitments in the 2022 Budget, it is interesting to see targeted investment in areas that this government believes are necessary to support the economy.
• As always, a few pocketbook policies are also included, such as the doubling of the Guaranteed Annual Income System for Ontario’s lowest-income seniors for 12 months as well as an extension to the gas and fuel tax cuts keeping the tax rate at 9 cents per litre until December 31, 2023.

Opposition’s reaction

Ontario New Democratic Party (NDP) finance critic, Catherine Fife, criticized the FES calling on the government for more spending on healthcare and education, stating: “Ontarians should be able to count on high-quality health care and education, and it takes investments to make that possible.”

Similarly, Ontario Green Party Leader, Mike Schreiner, felt that the statement missed the mark, calling for investments in education and poverty reduction, and Ontario’s Liberal finance critic, Stephanie Bowman, again suggested that the Ford Government must invest more in the province’s publicly funded healthcare and education systems with emergency rooms in crisis and education workers underpaid.

What’s next?

NATIONAL will continue to monitor political and industry reactions and provide further updates. As always, our team of Public Affairs experts is available to provide further insights and analysis on this week’s fiscal update and how it affects your organization or sector. And of course, our team is also available to support your participation in Ontario’s pre-budget consultations in early 2023.