Backpay deals for defeated Bill 124 pushed Ford government to overspend in 2023

Retroactive salary payments to education and health-care workers led to billions of dollars in overspending at Queen’s Park, according to the province’s financial watchdog, as the Ford government grapples with the price tag of its failed Bill 124.

The controversial wage-capping legislation was deemed to be unconstitutional by two successive Ontario courts, triggering billions of dollars in back pay being handed out to thousands of public sector employees.

While the Ford government initially attempted to keep the controversial legislation in place, Premier Doug Ford’s cabinet eventually agreed to repeal the legislation in its entirety.

Speaking at Queen’s Park on Wednesday after the Financial Accountability Office of Ontario (FAO) published its overspend findings, Finance Minister Peter Bethlenfalvy did not say if he regretted the now-rescinded law.

“No, no,” he said after being asked if the legislation was a “mistake” for his government to pass.

“That was a different time, of course,” Bethlenfalvy said, referring to 2019 when the legislation was originally introduced.

“We tabled that legislation and we got hit with COVID and a lot of water has gone under the bridge, right now we’ve decided to move forward and listen to the courts.”

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Some unions have already renegotiated and received retroactive pay while others, including non-unionized workers, are still waiting for details on wage settlements.

At the start of the year, Ford admitted that backpay deals had cost his government “billions” of dollars.

The FAO put a finer point on that number, calculating the cost at $13.7 billion in projected backpay. The watchdog’s latest finance report on Wednesday morning showed the cost for two of the province’s largest employment sectors: education and health care.

The Ministry of Education received a $2.62-billion bump as of the third quarter — 12 per cent higher than planned — which the FAO said mostly went to school boards that employ teachers and education workers.

The Ministry of Health received a $1.5 billion increase as of this quarter — 2.8 per cent higher than planned — which the FAO said was earmarked for the operation of hospitals, home care, and community services that employ nurses and other health-care workers.

Critics say the backpay deals aren’t enough to undo the damage of the wage restraint legislation, which nursing unions in particular have linked to retention issues in the sector.

“Not only did it literally cost Ontarians millions in legal fees and court battles but it’s going to cost us all,” Ontario NDP Marit Stiles said.

“They should have known this was illegal, we told them it was unconstitutional and they were eventually going to pay the price.”

Ontario Liberal MPP Adil Shamji said Bill 124 is “clearly not water under the bridge,” particularly for health-care workers.

The FAO’s report also shows the Ford government could be preparing for additional payments that have not yet been awarded.

The contingency fund, the government’s equivalent of a rainy day fund, has grown to $5 billion.

“We don’t know what the government intends to use it for,” said Financial Accountability Officer Jeffrey Novak.

The Ford government’s 2023-24 budget began with $4 billion in contingency funding and was forced to lean on the pool of cash through the fiscal year.

In the third quarter, the FAO notes, the government topped up the fund by $2.5 billion with little clarity about why the government needed the extra cash in contingency funding.