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Ontario’s 2019 Fall Economic Statement: A new chapter for the Ford Government?

Ontario’s 2019 Fall Economic Statement: A new chapter for the Ford Government?

Ontario’s new Finance Minister Rod Phillips released his first and the Ford Government’s second Fall Economic Statement (FES) yesterday, only a few months after taking over the portfolio from Vic Fedeli, who now serves as the Minister of Economic Development, Job Creation and Trade. The 2019 Ontario Economic Outlook and Fiscal Review: A Plan to Build Ontario Together proposes an additional $1.3 billion in spending to address gaps felt by the province, many of which were a result of program and policy changes put forward by the same government since taking over in June 2018. According to the FES, Ontario’s deficit is now expected to be $9 billion for this fiscal year, which is still below the $10.3-billion projection from the 2019 budget. While that figure is higher than last year's deficit of $7.4 billion, the province can access a $1-billion reserve to offset the spending to rout its projections.

So where does the new spending go?

The $1.3 billion cash injection is earmarked toward Ontario’s critical services including healthcare, education, child care, and social programs. Specifically, the province will be investing an additional:

  • $404 million in healthcare, including:
    • $227 million toward physicians and services under OHIP and the removal of co-payments for prescriptions for long-term residents
    • $68 million into small and medium-sized hospitals
    • $41 million toward Public Health Units
    • $26 million to support municipal land ambulance operations
  • $186 million in education, including:
    • $122 million toward child care programs
    • $64 million to support elementary and secondary education
  • $637 million in children’s and social services, including:
    • $310 million toward social assistance, developmental services, child welfare
    • $279 million into Ontario’s autism program
    • $43 million in youth justice services
    • $6 million on language training for newcomers
  • $94 million in other programs including a forest fire fund, highway maintenance, winery programs, and program audits for municipalities and schoolboards

The newly announced funding measures may demonstrate a shift in direction for the Ford Government, as its tenure to date has included rolling back funding toward education, healthcare, and social services. The $404 million in healthcare also affords some leniency for Ontario’s Deputy Premier and Health Minister Christine Elliott and Long-Term Care Minister Merrilee Fullerton to work towards the daunting mandate of ending hallway medicine.

Is Ontario still open for business?

While the message is clear on reprioritizing Ontario’s critical services, Minister Phillips also announced a few measures to keep Ontario open for business, including the reduction of the small business Corporate Income Tax rate to 3.2 per cent from 3.5 per cent, which will save businesses an estimated $1,500 annually. The province also announced the establishment of a Premier’s Advisory Council on Competitiveness as well as a new Regional Development Program which will kick off with a public consultation on how to encourage investment in rural and undercapitalized areas. These initiatives build on the Ford Government’s directive to cut red tape and reduce regulatory burden for Ontario’s business community.

What about modernization?

While a large part of the additional spend is focused on critical services, the FES also highlighted the Ford Government’s ongoing efforts to modernize the delivery of its public services including progress on moving toward digital, centralizing procurement, and reducing its physical footprint by selling off unused properties and office space reduction. These changes are part of Treasury Board President Peter Bethlenfalvy’s Smart Initiative, which will be delivered through various ministries and agencies, including the Ontario Digital Service, Ministry of Government and Consumer Services and Ministry of Infrastructure, among others. Centralizing procurement by adopting modern supply chain processes and collective public sector buying power could save Ontario an estimated $1 billion annually.

Other notable changes

The Government has also promised to introduce, enact, and amend legislation that would:

  • Open up the cannabis retail market by allowing authorized retailers to sell their products online or by phone (click-and-collect), and licensed producers to own and operate a retail store at their production facility
  • Increase access to alcohol by allowing the sale of wine and beer in corner stores and more grocery and big-box stores, and expanding its agency store program
  • Sell naming rights to the Metro Toronto Convention Centre and GO Transit train stations
  • Reduce the cost of living and travel for Ontarians in the North by dropping the Aviation Fuel Tax Rate in the region to 2.7 cents per litre from 6.7 cents per litre

The road ahead

According to Minister Phillips, the province remains on track to balance its books by 2023, with deficit reductions of $1.3 billion in 2019-20, $2.3 billion in 2020-21, $1.3 billion in 2021-22, and a whopping $5.4 billion in 2022-23. While a strong economy has certainly played its part in this year’s results, the next few years are a little less predictable given the current political climate south of the border.

So, what’s next for Ontario? Budget 2020! Consultations are now underway—ask our Public Affairs team how we can help advance your business or industry goals by participating in the process.