TORONTO — Ontario’s fiscal watchdog predicts smaller budget deficits over the next few years compared to those projected by the government last fall, saying the more positive outlook is due to an improved revenue forecast.
The Financial Accountability Office issued a report Tuesday that said Ontario’s deficit is expected to decline to $2.8 billion by the end of the 2023-24 fiscal year, down from $16 billion this fiscal year.
That’s compared to the government’s predicted budget deficit of $11.4 billion.
Financial Accountability Officer Peter Weltman said the difference “is largely due to a significant change in the revenue forecast.”
“That’s really where the bulk of this comes from,” Weltman said at a virtual news conference. The report also notes that a “lower projection for interest on debt expense” by the watchdog’s office contributed to the $8.6 billion difference.
In an interview, Weltman said his office had more time than the government to see how the economy has rebounded from COVID-19 over the past months, noting that it’s been difficult to nail down reasonable economic forecasts during the pandemic.
The watchdog report projects that revenues will be $7.6 billion higher by 2023-24 than figures in the government’s plan.
The report makes total spending projections similar to the government’s for the fiscal year ending in 2024. But it highlights shortfalls for programs in health, education, justice, postsecondary education and social services in government’s plan, which it says could be offset using “significant unallocated funds.”
Weltman said a lot of the unallocated funds are “COVID-earmarked money” that didn’t have a specified allocation as of Jan. 20. The numbers are not included in the watchdog’s projections until the government specifies its plans for the money, and Weltman said “the government can do really what it wants to do” with the funds.
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“(Government) can create new programs, it can enhance existing programs, it can fund those programs shortfalls or it could just hold on to it and reduce the deficit,” he said.
The Financial Accountability Office’s report comes ahead of the Progressive Conservative government’s election-year budget that’s expected to come before the end of next month.
The Opposition New Democrats raised concerns about the report showing lack of funding in areas like health and the potential for unannounced tax cuts, which the watchdog report said could explain the difference between its tax revenue projections and the government’s.
“If the Financial Accountability Officer is right, (Premier Doug Ford) is planning to take even more away from our health care, our children’s schools and our social services and use that money for corporate tax cuts for his big box buddies,” NDP finance critic Catherine Fife said in a written statement. “We cannot give him a chance to do that.”
Mike Schreiner, leader of the provincial Greens, said the Ford should clarify his plans for social services in light of the shortfalls pointed out in the report.
“It’s inexcusable to leave Ontarians out to dry at a time when people and businesses are already struggling so much,” Schreiner said in a statement. “It’s time for Doug Ford to be honest about his plans and start making the investments needed for a green and caring recovery.”
Liberal Leader Steven Del Duca highlighted the wide gap between the watchdog’s and government’s forecasts.
“The government’s revenue forecasts were off by billions and billions of dollars,” he said in a written statement. “Their poor financial planning has needlessly starved our hospitals and schools at a time when they needed support the most.”