Are the Tories actually underspending? Here’s what the numbers say 

Posted on August 5, 2023 in Governance Debates

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TVO.org – Opinion/Politics
Aug 4, 2023.   John Michael McGrath

OPINION: A new report from Ontario’s spending watchdog suggests the province managed to record a small budget surplus for 2022-23. That has the government facing criticism on multiple fronts.

Reports from the Financial Accountability Office have settled into a familiar, almost comforting routine at Queen’s Park: the FAO issues a report saying the government is spending X dollars when it said it would spend Y, and here’s why that’s a problem; the government responds by saying, in essence, nuh-uh, the FAO’s got its sums wrong, and here’s why (insert polished messaging from the Ministry of Finance here). This week was no exception: the latest report from the legislature’s independent spending watchdog shows that, under Premier Doug Ford and Finance Minister Peter Bethlenfalvy, the government is underspending on its own budget targets by billions of dollars — and has, in fact, managed to record a small budget surplus for fiscal year 2022-23, which ended on March 31.

The government, with the soothing reliability of the sunrise, says nuh-uh: “As we’ve said all along, FAO opinions are not representative of actual government spending,” a spokesperson for Treasury Board President Prabmeet Sarkaria told TVO Today via email. “In the past five months, the FAO has changed its outlook on health spending three times. Just over a month ago, the FAO said we’re overspending on health care, postsecondary education, and other program sectors by billions of dollars. Now, it says that we are underspending on those same sectors by millions.”

Former financial-accountability officer Peter Weltman, whose term was not renewed earlier this year, used to respond to the government’s grousing on this point with the simple observation that the only numbers the FAO has access to are the numbers the government itself provides: if the government wants more accurate conclusions from the FAO, it can provide more accurate numbers. On that point, the watchdog’s office is careful to state that its regular spending monitor uses unaudited numbers provided by the government — the audited numbers (audited, it should be said, by the just-as-independent auditor general, Bonnie Lysyk) are released as part of the usual budget cycle, and the full record for the 2022-23 fiscal year will be released in the public accounts later this fall.

Even if the audited numbers back up the government’s side of this little micro-dispute, that doesn’t make the FAO report less interesting or valuable. When Bethlenfalvy presented the government’s budget plan earlier this year, he projected overall program spending (that is, the government’s bills for everything that isn’t debt service) of $189 billion. The FAO’s spending-monitor report shows the government coming in at $187 billion instead — $2 billion under its own spending plan and $7 billion below the revised spending estimate the government had previously filed.

To be clear, the government did spend more in 2022-23 than it did in 2021-22. It’s just that, as Randy Robinson explains for the Canadian Centre for Policy Alternatives, program spending increased much more slowly than did population growth or inflation. When you adjust for those factors, real per capita spending fell by 3.6 per cent. Things get leaner still: $5 billion of the government’s booked spending comes from a settlement over the Robinson-Huron Treaty dispute: Ontario and Canada are paying a combined $10 billion in annuities owed under that treaty. That payment is important and owed to the 21 First Nations that were denied their due for too long, but it’s also a one-time extraordinary expense. Remove that from the story, and real per capita spending in the past fiscal year falls further still.

The public accounts due out in a month or so may substantially revise the story for 2022-23, but it’s worth noting that, even according to the government’s own budget, spending in 2023-24 (that is, the current fiscal year) isn’t supposed to grow very much, increasing from $189 billion to just $190.6 billion. Spending might not have grown much last year, and, if the Tories stick to the plan, it’s really not going to grow much at all before April 2024.

To put it in more practical political terms: the Ontario government is already dealing with criticism on multiple fronts from political constituencies with demands that are hardly unreasonable: things like keeping hospital ERs open or adequately funding forest-fire suppression in the worst fire season in Canada’s recorded history or keeping the province’s largest city from falling into a budgetary black hole. These aren’t extravagances — they’re the normal things people expect from government. (And that’s before we get to the more chronic ailments of Ontario’s public sector, like hallway medicine in hospitals.)

Politically, this isn’t hard to explain: governments traditionally front-load their spending restraint in the early parts of their mandate so they can be more generous closer to the next election. But the strategy relies on voters being willing to forgive and forget — and on the opposition parties failing to present a viable alternative. The Tories have had those factors working for them so far, but there’s no guarantee that luck will last forever.

https://www.tvo.org/article/are-the-tories-actually-underspending-heres-what-the-numbers-say?utm_source=TVO&utm_campaign=3dc96ec701-TVO-Today-Newsletter-SAT_COPY_01&utm_medium=email&utm_term=0_eadf6a4c78-3dc96ec701-68105177

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